5 ms·

Cheering Silicon Valley Bank Bailout, Gavin Newsom Doesn’t Mention He’s a Client

62 points by mikece 4y ago

lsllc 4y ago
"At least three of the California governor’s wine companies are held by SVB, and a bank president sits on the board of his wife’s charity."
icedistilled 4y ago
This reporting rings of "A democratic leaning judge can't rule on republicans due to bias" and vice versa.
- StrangeATractor 4y ago
  Not a fair comparison, Newsom has a substantial portion of his money directly tied to the fate of this bank. If this were a legal case a judge would have to recuse himself.
  - bdcravens 4y ago
    I suspect many YC companies also had money there.
  - icedistilled 4y ago
    If he was a FDIC decisionmaker, then yes he would have needed to recuse. He's the governor of CA and the FDIC just stopped major portions of california's economy from exploding. Of course he'd going to cheer that. It would be extremely odd and out of place for him not to cheer an action that likely prevented millions of californians from being out of work in a week or two. Big surprise that he is also touched by something that has a direct or immediate but indirect effect on ALL californians.
threeseed 4y ago
This is reaching. Newsom was always going to be supportive of the bailout of any bank's depositors. They are largely ordinary voters. Let alone a bank that dealt with an integral part of the California economy.
- deleted 4y ago
  [deleted]
- cool_dude85 4y ago
  >They are largely ordinary voters. Is that right? I wonder what proportion of voters have >$250k in a bank account, and if it's a very small proportion, whether it's fair to call such people "ordinary voters". For example, if I levy a tax on 50+ foot yachts, would it be fair to say that I'm just taxing ordinary voters?
  - dboreham 4y ago
    > I wonder what proportion of voters have >$250k in a bank account Not many, but some larger number may have been expecting paychecks cut from those deposits.
    - cool_dude85 4y ago
      They're still owed the money regardless of whether the company they work for has it in their bank account or not. And wouldn't their employer, acting responsibly towards its employees, have used its advanced FDIC payout, as well as the certificate for the funds remaining, to cover the cost of making payroll? Dean Baker explains how the process would have worked absent this bailout here: https://twitter.com/DeanBaker13/status/1635598421037043712 https://twitter.com/DeanBaker13/status/1635598421037043712
- lapcat 4y ago
  > This is reaching. How is it reaching for the media to report on a politician's conflicts of interest, as well as the politician's failure to mention said conflicts of interest? This is exactly what the media is supposed to do. The voters can judge for themselves, given the info. But let's give them the info, not hide it.
cameronfraser 4y ago
I don't think it is a bailout. Doesn't the company have to survive to be a bailout?
- synu 4y ago
  There were two groups that could receive a bailout - owners of the bank, so the bank could survive, and depositors who had deposits larger than the insured amount. Only the latter received a bailout and were made whole beyond their level of insurance.
MBCook 4y ago
The bank was not bailed out. The depositors were. Investors may lose almost everything. The management is sacked. The bank is dead, not bailed out.
- metadat 4y ago
  SVB management cashed out millions in stock sales in the preceding months and days before the implosion, which is the closest thing you can get to a soft landing in this circumstance. It's difficult to believe they top executives didn't know something was severely wrong in 2022 when they setup the sales.
  - MBCook 4y ago
    I’m very curious to see what happens to them. Two agencies announced investigations into the collapse today (initial fact finding). If they knew this was coming, and that seems very likely, I wonder if there’s a law that could be used to claw that back/punish them.
  - brogrammernot 4y ago
    It’s actually not difficult to believe at all in my opinion. They had 105b plans prepared, filed and approved by outside entities. You can see in the SEC documents and company filings all of the sales were pursuant to those plans, which are also commonly done to cover tax obligations throughout the year due to the vesting of stock. KPMG passed SVB’s audit and several top financial firms had SVB’s default risk at around 2.5%. The executives didn’t expect a “run on the bank” and those longer-term assets had been underwater for awhile & the financial market knew but expected they would be fine when they came to maturity. They booked a loss to shift funds into shorter-term securities with higher yields to hedge and hindsight is 20/20 but they should’ve hedged sooner. Overall, I don’t believe there was anything nefarious here & if we dislike the 105b rules, as many do, that should be the outcome of this review - that they need to change.
- whydoyoucare 4y ago
  Any rescue beyond the $250K insured limit is basically tempting other banks to take similar risks in the future. It is a bad omen for the American financial machinery. And I sincerely hope I am wrong on this count, and this is just an outlier...
olivermarks 4y ago
https://openthebooks.substack.com/p/the-silicon-valley-bank-coverup-and https://openthebooks.substack.com/p/the-silicon-valley-bank-... Silicon Valley Bank “Behested” $100,000 Gift To Newsom’s Nonprofit etc etc
alephnerd 4y ago
I have issues with Newsom, but this is just unnecessarily conspiratorial. Newsom's pre-political career was in the Wine Trade and Charity/Non-Profit world - both industries that banked HEAVILY with SVB. Most charter schools in CA and MA also use SVB as their primary bank.
- lapcat 4y ago
  > Newsom's pre-political career That's precisely the problem: "Newsom, a multimillionaire who was a businessman before becoming a politician, has been dogged for years with ethics questions about his corporate holdings." Not to mention: "Newsom also recently came under fire in the California press for allegedly abusing what are called behested payments"
  - alephnerd 4y ago
    I'm honestly not sure what you are arguing. If it is about Newsom doing some black magic back room deal to protect SVB because of his deposits, he does not have that kind of pull among Banking Regulators. The extent of his power in Banking Regulation (as any other Governor except maybe Hochul) is pleading to Biden and Zeints about any impact SVB may have at a macro level. If it's about a trust fund child who was groomed by the Pritzkers and Gettys from SF local politics to Sacramento, newsflash that's all politics as every level. Politics has always been impacted by money and fundraising. Name me a politician and I can point you to their benefactor.
    - lapcat 4y ago
      > I'm honestly not sure what you are arguing. I'm arguing that reporting the conflicts of interests of politicians is in fact the job of the news media, it's up to the voters to judge those conflicts of interests, given that information, and the information should not be ignored or suppressed by the media, so "this is just unnecessarily conspiratorial" doesn't make sense to me. What exactly do you propose the media do instead? > Name me a politician and I can point you to their benefactor. That's what the submitted story was doing. What's wrong with that?
Analemma_ 4y ago
I'm going to start flagging articles that call this a "bailout". It is not a bailout, and that term is being used in an emotionally manipulative way to get people riled up and ignoring the facts of the matter.

62 points by mikece 4y ago

"At least three of the California governor’s wine companies are held by SVB, and a bank president sits on the board of his wife’s charity."

icedistilled 4y ago

This reporting rings of "A democratic leaning judge can't rule on republicans due to bias" and vice versa.

StrangeATractor 4y ago
Not a fair comparison, Newsom has a substantial portion of his money directly tied to the fate of this bank. If this were a legal case a judge would have to recuse himself.
- bdcravens 4y ago
  I suspect many YC companies also had money there.
- icedistilled 4y ago
  If he was a FDIC decisionmaker, then yes he would have needed to recuse. He's the governor of CA and the FDIC just stopped major portions of california's economy from exploding. Of course he'd going to cheer that. It would be extremely odd and out of place for him not to cheer an action that likely prevented millions of californians from being out of work in a week or two. Big surprise that he is also touched by something that has a direct or immediate but indirect effect on ALL californians.

threeseed 4y ago

This is reaching. Newsom was always going to be supportive of the bailout of any bank's depositors. They are largely ordinary voters. Let alone a bank that dealt with an integral part of the California economy.

deleted 4y ago
[deleted]
cool_dude85 4y ago
>They are largely ordinary voters. Is that right? I wonder what proportion of voters have >$250k in a bank account, and if it's a very small proportion, whether it's fair to call such people "ordinary voters". For example, if I levy a tax on 50+ foot yachts, would it be fair to say that I'm just taxing ordinary voters?
- dboreham 4y ago
  > I wonder what proportion of voters have >$250k in a bank account Not many, but some larger number may have been expecting paychecks cut from those deposits.
  - cool_dude85 4y ago
    They're still owed the money regardless of whether the company they work for has it in their bank account or not. And wouldn't their employer, acting responsibly towards its employees, have used its advanced FDIC payout, as well as the certificate for the funds remaining, to cover the cost of making payroll? Dean Baker explains how the process would have worked absent this bailout here: https://twitter.com/DeanBaker13/status/1635598421037043712 https://twitter.com/DeanBaker13/status/1635598421037043712
lapcat 4y ago
> This is reaching. How is it reaching for the media to report on a politician's conflicts of interest, as well as the politician's failure to mention said conflicts of interest? This is exactly what the media is supposed to do. The voters can judge for themselves, given the info. But let's give them the info, not hide it.

cameronfraser 4y ago

I don't think it is a bailout. Doesn't the company have to survive to be a bailout?

synu 4y ago
There were two groups that could receive a bailout - owners of the bank, so the bank could survive, and depositors who had deposits larger than the insured amount. Only the latter received a bailout and were made whole beyond their level of insurance.

MBCook 4y ago

The bank was not bailed out. The depositors were. Investors may lose almost everything. The management is sacked. The bank is dead, not bailed out.

metadat 4y ago
SVB management cashed out millions in stock sales in the preceding months and days before the implosion, which is the closest thing you can get to a soft landing in this circumstance. It's difficult to believe they top executives didn't know something was severely wrong in 2022 when they setup the sales.
- MBCook 4y ago
  I’m very curious to see what happens to them. Two agencies announced investigations into the collapse today (initial fact finding). If they knew this was coming, and that seems very likely, I wonder if there’s a law that could be used to claw that back/punish them.
- brogrammernot 4y ago
  It’s actually not difficult to believe at all in my opinion. They had 105b plans prepared, filed and approved by outside entities. You can see in the SEC documents and company filings all of the sales were pursuant to those plans, which are also commonly done to cover tax obligations throughout the year due to the vesting of stock. KPMG passed SVB’s audit and several top financial firms had SVB’s default risk at around 2.5%. The executives didn’t expect a “run on the bank” and those longer-term assets had been underwater for awhile & the financial market knew but expected they would be fine when they came to maturity. They booked a loss to shift funds into shorter-term securities with higher yields to hedge and hindsight is 20/20 but they should’ve hedged sooner. Overall, I don’t believe there was anything nefarious here & if we dislike the 105b rules, as many do, that should be the outcome of this review - that they need to change.
whydoyoucare 4y ago
Any rescue beyond the $250K insured limit is basically tempting other banks to take similar risks in the future. It is a bad omen for the American financial machinery. And I sincerely hope I am wrong on this count, and this is just an outlier...

olivermarks 4y ago

https://openthebooks.substack.com/p/the-silicon-valley-bank-coverup-and https://openthebooks.substack.com/p/the-silicon-valley-bank-... Silicon Valley Bank “Behested” $100,000 Gift To Newsom’s Nonprofit etc etc

alephnerd 4y ago

I have issues with Newsom, but this is just unnecessarily conspiratorial. Newsom's pre-political career was in the Wine Trade and Charity/Non-Profit world - both industries that banked HEAVILY with SVB. Most charter schools in CA and MA also use SVB as their primary bank.

lapcat 4y ago
> Newsom's pre-political career That's precisely the problem: "Newsom, a multimillionaire who was a businessman before becoming a politician, has been dogged for years with ethics questions about his corporate holdings." Not to mention: "Newsom also recently came under fire in the California press for allegedly abusing what are called behested payments"
- alephnerd 4y ago
  I'm honestly not sure what you are arguing. If it is about Newsom doing some black magic back room deal to protect SVB because of his deposits, he does not have that kind of pull among Banking Regulators. The extent of his power in Banking Regulation (as any other Governor except maybe Hochul) is pleading to Biden and Zeints about any impact SVB may have at a macro level. If it's about a trust fund child who was groomed by the Pritzkers and Gettys from SF local politics to Sacramento, newsflash that's all politics as every level. Politics has always been impacted by money and fundraising. Name me a politician and I can point you to their benefactor.
  - lapcat 4y ago
    > I'm honestly not sure what you are arguing. I'm arguing that reporting the conflicts of interests of politicians is in fact the job of the news media, it's up to the voters to judge those conflicts of interests, given that information, and the information should not be ignored or suppressed by the media, so "this is just unnecessarily conspiratorial" doesn't make sense to me. What exactly do you propose the media do instead? > Name me a politician and I can point you to their benefactor. That's what the submitted story was doing. What's wrong with that?

Analemma_ 4y ago

I'm going to start flagging articles that call this a "bailout". It is not a bailout, and that term is being used in an emotionally manipulative way to get people riled up and ignoring the facts of the matter.