Republican attempts to call SVB the “Woke Bank” are failing

Republican claims that the Silicon Valley Bank (SVB) that collapsed last week was “too bright to fail” might make for good soundbites, but they don’t necessarily square with the reality of a federal intervention that aimed to do so to protect depositors while allowing this bank to fail.

Notable GOP leaders were quick to blame the failure of the bank, the second largest in US history, on its touted diversity and inclusion policies. SVB describes itself on its website as a “women-friendly brand” and “is strongly committed to equal opportunity values ​​and policies in all our employment practices”.

Elise Smith, co-founder and CEO of Praxis Labs, a company specializing in inclusion education and founded by women of color, said such diversity policies are “critical to managing such unpredictable circumstances.”

The SVB’s failure on March 10 led to federal intervention to guarantee depositors’ funds at the bank, as was the case with Signature Bank when it failed 48 hours later. The Biden administration’s pledge to cover deposits, including those that exceed the $250,000 federally insured limit, should limit the impact of the collapse on the broader economy.

Missouri Senator Josh Hawley speaks during the Turning Point USA Student Action Summit held at the Tampa Convention Center on July 22, 2022 in Tampa, Florida. Hawley claimed that Silicon Valley Bank’s depositors were protected by the federal government because it was “too bright to fail.”Joe Raedle/Getty Images

SVB had primarily served tech companies and startups, and there were many big brands with billions in assets, from gaming company Roblox to streaming giant Roku, media company BuzzFeed and financial technology company Circle.

Analysts had warned that without government intervention, the collapse of the SVB would have shut down potentially thousands of companies that depend on their deposits for day-to-day operations.

Since its collapse, conservatives have suggested that the company’s focus on so-called “wake” policies led to its failure.

“Across our organization, we strive to build a diverse workforce without regard to gender, race, color, age, national origin, religion, sexual orientation, disability status, pregnancy, gender identity, genetic information, veteran status, or any other classification protected by law or regulation at the federal, state, provincial or local level,” the company said on its Diversity, Equity and Inclusion (DEI) page.

“They’re so concerned about DEI and politics and all kinds of things,” Florida Gov. Ron DeSantis, a likely Republican presidential nominee, told Fox News Sunday. “I think that really stopped her from focusing on her core mission.”

Senator Josh Hawley, a Republican from Missouri, went one step further. On Thursday, he claimed to NBC that the bank was bailed out by the federal government because it was “too awake to fail.”

Referring to the bank’s investment in climate change solutions, he said it means SVB is “very politically connected and has an agenda that they’re sure to put forward to people here who see, ‘This is important, we’ve got’ all invest that stuff, don’t let it go to waste!’”

“I think they should be treated like everyone else,” Hawley added.

“You only get protection if you’re a bright billionaire who gives the Democrats big money,” Hawley told Fox News Thursday. “Why is this bank being saved?” he added. “Because it’s a bunch of bright billionaires.”

But Smith of Praxis Labs dismissed that view.

“It’s disappointing to hear that SVB’s investment in Diversity, Equity and Inclusion (DEI) is being blamed as the reason for its collapse,” she said news week. “What we’re hearing from people-centric leaders is the opposite: our current market uncertainty and ongoing societal turmoil actually underscores the importance of continuing to invest more in people and DEI efforts.

“It is ‘human skills’ such as empathy, collaboration and inclusive leadership that are critical to dealing with such unpredictable circumstances and instilling resilience in teams,” she added.

Federal regulators shut down the SVB after a run on the bank that saw depositors want to withdraw their funds in one go. According to CNN, the trigger was the announcement two days earlier that he had sold securities at a loss to plug a hole in his finances.

The hole emerged after the Federal Reserve drastically increased interest rates to fight inflation, which also caused bond prices to fall. SVB was among many banks that invested in government bonds when interest rates were near zero during the pandemic.

While the Federal Deposit Insurance Corporation (FDIC) protected SVB customers’ deposits beyond the usual insurance limit, it did not bail the bank out. Instead, depositors’ accounts have been moved to a new “bridge bank” run by the federal government with a new CEO. The same happened with the Signature Bank.

While SVB was touting its DEI credentials, many of its customers were small businesses and numerous day-to-day banking customers. Even among the billionaires who were customers, some were rather the opposite of Democratic donors.

Peter Thiel, the co-founder of PayPal and Palantir — who has been a key supporter of Republican politicians including former President Donald Trump and Hawley himself — told the financial times that he had “stuck” $50 million of his own funds in the bank.

news week emailed Hawley’s office for comment.

Contrary to Republican claims, Heather Shen, co-founder and chief product officer of Praxis Labs, suggested that SVB might not have been comprehensive enough.

“Study after study shows that greater diversity and inclusion leads to better business outcomes,” she said news week. “Failure to consider diverse perspectives results in missed opportunities to create impactful products and services that appeal to all and create value for all.”

A 2020 report by consulting firm McKinsey found that “the relationship between diversity in leadership teams and the likelihood of financial outperformance has increased over time.”

Before the collapse, five out of twelve SVB board members were women, and there was only one member who was a person of color. A recent Diversity and Inclusion report showed that 46 percent of the workforce was female, as were 38 percent of managers.


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