Breaking Points with Krystal and Saagar - 3/13/23: Massive SVB Bailout, Crypto Bank Collapses, Execs Sold Millions Before Collapse, JD Vance Rips Republicans on Norfolk, Pence Blasts Trump and Tucker, Desantis Blames Wokeness on Bank Collapse, Fauci Freaks Over Prosecution Calls

Episode Date: March 13, 2023

Krystal and Saagar discuss the massive SVB bailout propping up the banking sector, Romney and Mark Cuban demand bailouts, Crypto Bank Signature collapses amid tech fallout, SVB Executives sold millions in stock and took bonuses before collapse, Matthew Zeitlin (@MattZeitlin) from the GridNews joins us to talk about how all banks are being considered "Too Big to Fail", JD Vance rips Republicans opposing Norfolk Southern Regulation, Pence blasts Trump and Tucker for January 6th, and Desantis blames Wokeness for Bank collapse, and Fauci is flustered when asked about calls for his prosecution.To become a Breaking Points Premium Member and watch/listen to the show uncut and 1 hour early visit: https://breakingpoints.supercast.com/To listen to Breaking Points as a podcast, check them out on Apple and SpotifyApple: https://podcasts.apple.com/us/podcast/breaking-points-with-krystal-and-saagar/id1570045623 Spotify: https://open.spotify.com/show/4Kbsy61zJSzPxNZZ3PKbXl Merch: https://breaking-points.myshopify.com/ Learn more about your ad choices. Visit megaphone.fm/adchoicesSee omnystudio.com/listener for privacy information.

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BreakingPoints.com. Good morning, everybody. Happy Monday. We have an amazing show for everybody today. What do we have, Crystal? Indeed we do. Boy, oh boy, do we have a show for you this bank bailout Monday. We are going to go deep on what exactly is going on in our financial system, the government's reaction. President Biden is expected to speak today. There is a lot to talk about there. So we are going to cover that extensively. A couple other stories we want to make sure to touch on this show, too. Norfolk Southern, an effort by a couple of senators, bipartisan fashion, to try to hold them to account.

And also some notable comments from former Vice President Mike Pence, finally kind of saying what he really thinks, I guess, about Trump and in the most cringe possible setting. So we'll break all of that down for you. But before we get to any of that, big news we announced last week, we're really excited about our video, full show in video now available on Spotify for premium subs. That's right. So I know a lot of you have had questions. So to spare the customer service inbox, we're going to go through it here. Log into your Supercast account, click on your breaking point subscription, click on the Spotify icon to link your account. It will then open. It will ask you to log in and voila, you are good to go. You can watch the full show within there.

I know a lot of you have been really appreciate it. I know that we have a big audience there on Spotify. So now for people who are driving or whatever, I'm not saying that you should do this while you're driving, but maybe at a red light if you're interested in what we're throwing up there on the screen. This is a specific example. Somebody told me about how much they loved it. So there you go.

We've got the video there. I think you guys will enjoy it. You can speed it up, listen to us at 3.5 or however you want it to be. And you can switch seamlessly back and forth as up to the Spotify platform. It took a lot of work for our team and for Supercast. So thank you guys so much.

And thank you for everybody who has signed up. And of course, if you are not a premium subscriber yet, you can go to BreakingPoints.com in order to become a premium subscriber and then follow these steps that Sagar just laid out. And to be honest with you, we were really excited about getting the video on Spotify, but I'm not sure that I knew how much you guys would be excited about it. Yeah, I agree. So thank you for the tremendous feedback. It looks really great. So super psyched to be able to offer that to all of you. That's right.

And for all the new improvements coming to the show, it's going to even look even better on the Spotify screen. Okay. All right. Let's start with the totally not a bailout bailout. Let's put this up there on the screen. I did that breaking news segment for you guys on Friday just to get everybody up to speed with FDIC and California regulators took over Silicon Valley Bank. Lots of speculation all over the weekend, massive calls and pressure on the financial system to pursue a bailout of depositors. And lo and behold, Sunday evening, Secretary

Yellen, the chairman of the Federal Reserve and the head of the FDIC come out with this statement. Secretary Yellen has approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting on Monday, March 13th. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. So let's take a step back and just remember. So Silicon Valley Bank goes into federal ownership on Friday. They start to administer the bank. They begin to pursue a variety of options. One of them is a for sale where another company is going to come in and buy Silicon Valley Bank and fulfill the depositors. Apparently, there were some indications that PNC

was attempting to buy the bank, but they decided to pull out at the last minute. So then what ends up happening is that the FDIC, despite the fact that they only insure deposits up to $250,000, invoked something called the systemic risk exception. The systemic risk exception allows the FDIC to protect the deposits of all depositors, even over that of 250,000, of which some at least 90% or so of the deposits in Silicon Valley Bank were. This was the bank, as I had mentioned in that segment, that processes at least up to 50% of the bank accounts for almost all tech startups in the United States. A tremendous amount of tech wealth was concentrated. My personal favorite

example is that Roku, a multi-billion dollar company, had a single checking account with $457 million in the account. Which, let me just say, pause on that one, that is absolutely moronic. Oh, it's nuts. I mean, that CEO should be fired instantaneously because it doesn't take a financial guru to know that you are only insured up to $250,000. So they placed a half a billion dollar bet effectively on the idea that the government would come in and bail them out, which, hey, ultimately worked out for them. Well, here's what's the crazy part of it, which is now, basically, we've set a standard for, we'll also talk about the other bank that's been put into ownership of federal regulators and is going through later on.

That has more to do with crypto. It's an interesting example, but the systemic risk option was invoked for that bank as well. Which is insane. Oh, yeah, it's also crazy. And look, I'm not saying I don't feel for people who have their deposits in the bank,

especially if you've got tech startup and you've got to make payroll, and I know that it's very, very dicey and it's very stressful. So I have total sympathy with those folks. But we've got to take a step above and look at the total financial system. Per David Sirota, we have $9 trillion in deposits in banks across the United States that are over the threshold, that are completely uninsured. We have now set the precedent that if a bank fails, your deposits are totally good to go. Okay, I mean, I'm kind of actually okay with that.

But, but, and this is the big but, then the banks, though, are getting to use our money, our deposits, to take loans and to make a lot of profits. But then when they fail, the deposits are backed by the feds. So how does that work? So you either have a private bank with the attendant risk of having a private bank, or you have a public bank. I'm not even necessarily saying I support a public bank, but maybe the option or something like that. I don't want federal control of all money. But the entire point of having a private banking system was the idea that there is some attendant risk with the FDIC that's going to insure you up to $250,000.

So this has really blown the cap off of the idea that this is a private industry really in any way. And I don't know why these people are allowed to make millions and millions of dollars if their deposits, which is the fundamental part of all of their wealth and their balance sheet, is going to be totally insured by the federal government. That's right. And I think that's an incredibly key point. Whatever you think about this bailout, and don't let anyone gaslight you into thinking that this is not a bailout. And not just of SVB and not just First Republic, which is the other bank that failed, but of the entire banking system. So two things you need to recognize. Number one, Asaga was just laying out. This de facto indicates to every bank in the entire country that even though they've only been paying into the FDIC to insure $250,000 deposits,

de facto, they actually have insurance on 100% of deposits. Now, the powers that be here, our central bankers are saying, oh, no taxpayer dollars are on the line. Okay. Maybe not technically for Silicon Valley Bank, but who do you think is backstopping that entire insurance system when the banks have not been paying in sufficient funds to actually insure the entirety of the deposits? Who do you think is on the hook for that? That's number one. Number two, in some ways, the least important thing they did was to backstop these particular deposits. Because in addition to that, they also announced new lending availability for banks across the country. And not only that, but the reason that Silicon Valley Bank failed, one of

the reasons is because they held a lot of their assets in long-term treasury bonds. As the Fed has lifted interest rates, that has caused the value of those bonds to decline. So they were suffering losses in terms of their assets. And we're going to those bonds to decline. So they were suffering losses in terms of their assets. And we're going to show you in a moment how they were sort of an outlier in terms of this particular use of their assets. Also, they were consolidated in one particular industry, which also was very sensitive to Fed interest rates. That's the reason that this bank ultimately collapsed. So they had to take losses on those assets. The Fed is now saying that if you hold similar assets that have declined in value, they're not going to force you to take losses.

They're going to pretend that those assets are still valued at what you purchased them for. That is effectively a gigantic giveaway, not just to SVB, but to the entire banking system. And again, the idea that, oh, this is just taxpayers have nothing to do with this. All of this is based on the fact that this is backed by the U.S. government, which is backed by the U.S. taxpayer. So you have two things that have happened here that are incredibly significant in ways that I struggle to completely wrap my head around. Number one is, as we said, the 100% of deposits now apparently insured by you and me and the federal government. Okay, that's number one. Number two, this idea that these two banks, which just failed, are quote unquote systemically important.

This is insane. It's ludicrous, especially this crypto bank that just this is not a large bank. Well, that's what really sets the precedent of any bank that fails. So the precedent that is set here is every bank is too big to fail. So, okay, if that's where we are, we need to have an entire rethink of our banking system, to your point, Sagar, that reflects the fact that ultimately the U.S. taxpayer is on the hook for all of these banks and for all of these deposits. And, you know, there's a lot of talk about, okay, is it a bailout or not? And these depositors, they didn't do anything wrong. They deserve to be bailed out. Okay, that's fine.

We have definitely bailed out the executives and shareholders of every other bank in the country, especially ones that had similar risk profiles as what this bank ultimately did. So let's go even deeper. Let's go put this up there on the screen. Our friend Jeff Stein asked this to a Treasury official. He says, aren't you exposing the U.S. taxpayers not just to uninsured deposits that need to be guaranteed, but for trillions more throughout the banks in the country? Quote, I think we will right now focus on addressing the current issue and stabilizing the banking system, assuring uninsured depositors that they will be made whole.

But I do think we'll be looking back and reassess and assess whether any changes should be made. I want to emphasize again, this is funded by fees on banks. But here's the problem with that. There's only $126 billion in the FDIC account to, quote unquote, bail out the depositors of all of this. That's barely enough to cover the uninsured deposits in Silicon Valley Bank. To take it even further, Crystal, and why it's a de facto tax on all of us, if the banks have to start paying more into the FDIC, right now they're at $126 billion. They have to get up to $9 trillion to eventually insure all of this. You ever heard of a bank that's going to voluntarily pay more money? Who do you think is going to be paying those fees? It's customers. We're the ones who's already bank accounts. They'll charge you for it if you have a low enough deposit. Guarantee you,

if they have to increase the amount they're paying to the FDIC, every single one of us are the ones who are going to be paying for it through all these BS banking fees, increase on annual fees on your credit. Oh, they're going to charge you for a debit card now. Oh, you want some checks? It'll be like $900, some other outrageous stuff. They will never pay it voluntarily. There's no possible way that you could ever enforce that. In fact, Silicon Valley Bank, and this is more reporting from Lever News, who, by the way, has done some of the best reporting on all of this, and especially as they do following the money in terms of corruption in politics. Silicon Valley Bank was lobbying against increasing the fees that banks have to pay into the FDIC, saying, oh, there's no risk here. There's no problem. Very low risk. So don't need to worry about it. We saw how that ultimately worked out.

There's one other thing that I really want to bring up here, because I think there is a notion out there that if the federal government didn't step in, that these depositors at Silicon Valley Bank would have lost everything, would have been wiped out, everything above $250,000. But there is, in fact, a process in place that is supposed to be followed in such a situation, which is, okay, first $250,000 insured, no problem. Everybody's clear on that. And then the rest of the deposits are backstopped by the assets of the bank. Right. So the federal government sells off the assets and then makes depositors as whole as possible. Based on what we know publicly available, that would have caused probably like a 10% haircut. You still would have likely had people getting somewhere around 90% of their deposits. Now, the argument that was made in quite strident

terms over the weekend, in particular by a lot of people in Silicon Valley who have skin in the game, is that you can't just let depositors take a haircut. You can't let the normal process play out because there's going to be a bank run. It's going to be catastrophe across the system. And so we have to act now to make sure they get 100 percent of their money right away on Monday to forestall that possibility. I think that's possible. But I also think that regulators were really swayed by the fact that you had a lot of influential people very loudly proclaiming in certain terms that there was going to be a bank run. And that scared them away from allowing the normal process to play out and forced them to

levy this absurdity that these were both systemically important banks and again, effectively codify within our country that literally every single bank is now considered systemically important, i.e. too big to fail. So let's put the third one up there on the screen. This is an important piece by Matt Levine, how the startup bank had a startup bank run. One of the problems for Silicon Valley Bank is its customers had too much cash and now they simply don't. What he's referring to is that startups that were cash flush kept their bank accounts very high in their balances throughout 2021. Then throughout 2022, as federal rates began to rise and they had to begin pulling cash out to cover a lot of expenses because they were unable to raise even more money, they began to

withdraw. Now, as the withdrawals continue, as I said, Silicon Valley Bank, or as you laid out, Silicon Valley Bank had a lot of treasuries. So they had to sell many of those treasuries at a loss in order to cover many of the deposits that were getting done. All of this cascades to the point where it's a very shaky procedure. Then they have an announced a new equity raise in order to try and pump cash into the bank. That is what really triggered a lot of people to say, oh, clearly there's some bad stuff going on here. And then on top of that, you had kind of group chats and other very influential people in Silicon Valley getting a hold of this, understanding that this was going to happen. And within, I think, about a 24-hour period, almost $42 billion were withdrawn from the bank.

That enough was just unable to completely collapse it because they didn't have the attendant cash that was available to them. Let's go ahead and put the next one up there. Our friend Kevin Roos actually did a pretty good write-up here in the New York Times. And really what he talks about is that this is the first online bank run in that the rumors around the insolvency of Silicon Valley banks spread so quickly. It's part of the reason why you had that $42 billion within a single day that was withdrawn and why the feds had to step in so quickly and not even be able to broker some sort of deal. So this was a bank just so deeply entrenched in Silicon Valley, it's almost difficult to comprehend. I mean, they had all sorts of

complex financial instruments that don't make sense for any other bank except for one that focuses on tech. And that's great in the boom times. It's bad in the bad times. And what have we learned right now? We just actually had hot jobs numbers, but tech is disproportionately having a lot of problems, especially with the demise of cheap money. And I think that the concentration of so many cozy banking relationships, Roku being a good example, having some checking account with $450 million. He may not even have the most amount in the checking. There might be people in there with like a billion dollar balance, which is nuts.

I mean, anybody who has anything to do with this business would tell you that that's outrageous. Idiotic. Part of the reason why, though, is that Silicon Valley Bank had such a long relationship with many of these people that they felt a deep amount of loyalty and in in some cases, we're signing them into exclusive lockups, where if they got venture debt through Silicon Valley Bank, they had to keep their checking account there. They had to do their mortgage there. It's basically like a vertically integrated tech bank, which again, it disproportionately exposes it. And whenever you look at their balance sheet, let's go to A4 here, please. This is a really interesting one that was actually put together by some financial analysts.

You can just see clearly the higher risk deposit base. Those who are just watching the U.S. bank to loan, the U.S. bank loan to deposit ratio. Those who are looking in the top right, look at every single other bank and then look at Silicon Valley Bank well over the 100 percent mark right in the higher right, look at every single other bank, and then look at Silicon Valley Bank well over the 100% mark, right in the higher risk deposit-based zone for nearly 110% of their loan to deposit ratio. So already they had a very high loan to deposit ratio. And then at the same time, whenever you look at Silicon Valley Bank, they had a very high impact of unrealized security losses on their capital ratios because so much of their assets were held in private markets where you had just a decimation of value. So there's a lot, a lot going on here. A lot that just shows you that, as you said

already, we showed you they have a high loan to deposit ratio. Their treasuries, I think in terms of their assets, they had 17% more in treasuries than any other bank in the United States. So already, basically, you just have bad executives that are at the top. Actually, some people who work at Silicon Valley Bank spoke to some people around them, and many of them were outraged at leadership who really didn't tell them what was going on. They announced that raise, which effectively collapsed it. They had no idea. Now they're possibly out of a job. So there are people at the bank itself who are really upset. Senior management, the FDIC, says they're gone.

But look, really the question is, are these people going to make money? Because they say the taxpayers will bear none of the losses. I don't want to see a single one of these people who is getting the bonuses that AIG got in the middle of their bailout. And there's no guarantee on that right now. Zero. Well, and we'll show you the numbers on this, but a bunch of management were cashing out

and selling their stock in recent weeks. Oh, and by the way, they announced bonuses literally on the day that the government took over the bank as well for their employees and executives. So, you know, they're going to be okay, I think, is the bottom line here, even though the party line from the government is that they were, quote, unquote, wiped out. And again, really important to keep in mind, we're not just talking about backstopping the depositors of these two banks here. That's one thing. We're also talking about a whole new Federal Reserve lending facility using basically souped up and fake asset prices as collateral, allowing this. So this is a massive injection

into the economy that has huge ramifications. And also, by the way, sort of stands directly at odds with the direction of monetary policy tightening that the Fed has been engaged in. And that's a whole other piece that we could get into. But, you know, the expectation was that the Fed was going to hike rates another 0.5 percent. So that's a very significant raise. Well, now you're going in the opposite direction, injecting funds into the economy and rescuing these particular workers who are involved with these particular banks, while your overall policy has been crushing workers and trying to trigger recession in terms of the labor market. So they also had their hand forced and are now directly at odds with themselves in terms of the direction of policy.

There's one other, you know, there's a lot more we could say about this, but I also think it's really important to point to the fact that, you know, this is a striking example of how the tech economy is in a wildly different place than a lot of the rest of the economy and the job market, that's number one. And number two, it's always incredible when there's a crisis that impacts wealthy and

influential people. Somehow they always have the mechanisms in place to quickly act. They don't have to wait and beg the parliamentarian or kiss Joe Manchin's toes or whatever. They don't have to do anything. They just have, they figure it out. They figure out the facilities. They make up bullshit rationalizations like, oh, they were systemically important. Okay, whatever. And somehow they're able to come through with all the cash in the world that they possibly need to backstop the system when it's wealthy and influential people whose lives and money are at stake. I think it's important to note that effectively, you know, I saw a tweet this morning. It's like democracy at this point basically means rule by judges and central bankers.

And I think that's really, you know, it's really quite apparent. So we have set up a system that reacts incredibly quickly and incredibly effectively when it is the wealthy whose interests are at stake. For everybody else, you got to haggle, you got to go through Congress, and ultimately nothing ever happens. Right. And so let's go to the second part here. It literally only took an hour for all of the leading people in the U.S. policymakers to just start, or influential economic thinkers, start calling for bailouts. Put this up there on the screen.

This was less than an hour after SVB failure. Larry Summers calls for all depositors at Silicon Valley Bank to get bailed out 100%. It's just, it's like you can't even make it up. Immediately after, let's go ahead and put this up there. He said now is not the time for discussions about moral hazard, okay? Which is of course, right.

I mean, now in fact is the time for a discussion about moral hazard because you've just told banks that their deposits are covered by insurance they didn't pay for and that their risky behavior is going to be always and forever backed up by the Fed. So I think this is actually a really critical time for a conversation about moral hazard. Absolutely. And Mitt Romney, the famous let Detroit go bankrupt, doesn't have the same theory for Silicon Valley. He says, Silicon Valley bank shareholders and executives lose it all as they should. Depositors in good faith, however, should recover, have access to deposits in order to meet their payrolls, pay their suppliers, and to prevent contagion. Again, you can sympathize with that, and I absolutely do, but then you have to have the correct mechanisms in place to make sure that all of us are not going to be paying more of these bank fees and that the

government and the taxpayers are not the ones who are actually backstopping the entire financial system when their sound business practice is supposed to be the check on it. And then personally, my favorite producer, Griffin, found this one, put this up there on the screen, from Ryan Mao, who works in climate. He says, with the implosion of SBB, the planet could literally be at stake. 1,500 companies in climate tech were venture-backed at the bank. And he goes on to make a case that if we don't bail out the bank, that we're actually going to destroy and hurt the Silicon Valley. We're going to destroy and hurt the planet because those climate tech companies are so vitally important. And then finally, Mark Cuban, go ahead and put this up there. He's called on the Fed to actually step in and buy the bank debt to, quote, end the run.

So all of these people who have, as you said, skin in the game, by the way, Bill Ackman was also the billionaire investor, was also immediately calling for, quote, a highly dilutive government bailout of Silicon Valley Bank, all making the case in terms of contagion that's happening across the economy. But, you know, first of all, I'm curious still about whether the contagion actually was real. By many respects, if you think about it this way, there has been all these tech layoffs, right? It hasn't impacted the jobs number of the economy literally at all. If you think about the Google layoffs in totality, they don't even equal a factory in Alabama if one of those were to go out of business. So tech is one of those high cash producing industries, very important to GDP as a whole. But in terms of workforce,

it is not even close in terms of punching it that way. Treasury indicated that there were several other banks, was their word, that had a similar risk profile. But we showed you some charts that indicated SVB was actually quite an outlier here. Now, we did have, prior to SVB collapsing, we also had Silvergate, which is a small crypto-focused bank that collapsed. Then you have SVB, then you have this other small-ish crypto-related bank that also collapsed.

So you can see it's very concentrated. We should have learned, they should have learned decades ago that having your eggs in one basket industry-wise is a very risky business practice to start with. And then they also, in the case of SVB, really upped the ante in terms of their interest rate risk by putting their assets also in these long-term treasury bonds. But I am skeptical of the case that was being made in, again, very loud and over-the- top terms by a lot of influential people on social

media, some of whom we just showed you, like Mark Cuban and others, that there would 100% be a bank run on Monday if we did not act. Because again, a lot of the commentary ignored the fact that there is a process in place, there is an existing process for dealing with banks when they are insolvent, and it does not lead to depositors losing all of their cash over $250,000. They likely would have taken perhaps about a 10% haircut. So in order to 100% backstop these depositors, they have effectively deemed every single bank in the country too big to fail which is a gigantic shift well i don't know if it's a shift in policy but it's a recognition that that's the reality of our banking system and that requires a dramatic overhaul of the way we're approaching this one other thing in terms of like the climate tech piece which again goes back to

the fact you know he's acting like oh all of these% fail. That is alarmist and it is just false. In addition, there are few people, few banking clienteles in the world that would be as well positioned to withstand having a cash crunch for a short time period than these individuals, many of them who are backed by wealthy venture capitalists who were some of the same voices who were demanding the bailout over the weekend.

Well, if they felt these companies were so promising, so important, et cetera, I didn't see them marshalling their wealthy resources in order to provide bridge loans and backstop the losses and make sure that these employees weren't hurt. Seemed to be a lot fewer libertarians in Silicon Valley than there were just maybe two weeks ago. So they weren't, you know, bootstrapping and coming together to make sure that this industry and their companies that they've invested in make it through this time. Instead, they just started screaming and demanding that the government, which again, they're saying no taxpayer dollars, but I think we've explained the way that ultimately we're all on the hook for this, but demanding that the government come to their rescue in this instance.

Yes, exactly right. And finally, let's go to the really good part here, which I really enjoy, which is on top of all this, and this shows you why the systemic risk thing being invoked here is now the precedent for all time. A bank you probably have never even heard of. Let's put it up there on the screen. The crypto-friendly Signature Bank has now been shut down by regulators. That was announced on Sunday in the systemic risk exception, which is also going to make all of their depositors completely whole by the Treasury Department. Well, this is a perfect example of a bank where you had a cozy relationship with regulators and with former congressmen, one of them being, throw this up

there, Mr. Barney Frank, the classic Dodd-Frank bill author himself, the chairman of the House Financial Services Committee, the so-called hero of the people, getting paid some $1 million to sit on the bank. And then when you consider also what this bank was doing and how exactly it facilitated its losses, Crystal, let's go and put this up there. Signature bank being closed by New York state authorities and also invoking the systemic risk exception is having the feds come in and backstop them largely because, again, largely because this bank was widely exposed to many of the losses in the crypto industry and much of their assets and balance sheet in terms of their uh deposits were they were unable to fulfill them because of such a wide loss this wasn't even the treasury department this

was a large bank that was went basically all in on the crypto industry and then got itself to the point where its assets were almost completely and totally wiped out. And with that wipeout, unable to fill their deposits, and the Fed step in and basically make all of their depositors whole. And this is total malfeasance on the behalf of the alleged malfeasance, by the way, for the lawyers who are out there. But at the very least, let's call it what? Mismanagement? Let's call it mismanagement to go all in and backstop the crypto industry, make yourself so wholly and totally exposed, unable to fulfill your deposits.

And then because, you know, what's the old, what's like you privatize the gains, socialize the risks? It's like how the FDIC is the one who is paying all these people's deposits. I saw somebody who was like libertarian on the way up, socialist on the way down. the risks. It's like how the FDIC is the one who is paying all these people's deposits. Yeah. I saw somebody who was like libertarian on the way up, socialist on the way down. It's like, wow, that is really well said. I mean, yeah. Well, and it's incredible with Barney Frank. Okay. So he's famously the author of Dodd-Frank Financial Reform, which in my opinion was an improvement, did not go far enough, but okay. Then he immediately leaves Congress, cashes in in a variety of ways,

one of which is serving on the board of this bank, Signature Bank, which has now gone belly up. And in his position now as a board member of this bank, he actually went and lobbied for them to roll back some of the very regulations that he held to author and put in place. So it's just, could not find a more perfect example of the disgusting nature of the American political system ultimately. And the idea that, listen, maybe, maybe you could have a fig leaf of truth to the idea that SVB was systemically important.

I think that's absurd, but okay, maybe. You could make that case with regional banks, especially in the state of California, but there's no making that case on this one. On this one, absolutely not. And so even if Silicon Valley Bank is getting all the headlines about their depositors being backstopped,

the very same provisions apply to Signature Bank as well under this same guise and fake nonsense that they're systemically important. And that's why it's so important to understand what this means, not just for this moment, but going forward. The U.S. government has said we are backstopping 100% of deposits at these banks and effectively de facto, as Jeff Stein pointed out, at all others. And if we are deeming Signature Bank too big to fail, every bank in the country is effectively too big to fail. We have got to think about what this means for our entire banking system. And the direction, like this direction as it exists right now is completely insane. that the public is on the hook for literally everything, and then the gains are all concentrated in a handful of a few wealthy executives and shareholders.

Of profits and of bonuses. That's where all of this is going to lie. Why don't we go ahead and tell the people about the bonuses? Yeah, so let's take a look at this. Go ahead and put this up on the screen. So we have this idea that, oh, they, you know, they didn't, they're not able to cash in. The shareholders and executives are completely wiped down. Okay. Well, well, before the collapse, it turns out executives were selling shares and at quite a rapid clip here. This is from Unusual Wales. It's actually in response to that Mitt Romney

tweet that we put up before. And they say, Mitt, this may interest you. Before the collapsed executive sold shares, Gregory Becker, the CEO, sold 11% of his shares on February 27th. Michael Zucker, who was their general counsel, 19%. Daniel Beck, the CFO, 32%. Michelle Draper, the CMO, 25%. So when you hear people saying, well, they got the executive management got completely wiped down. Well, they took their gains and locked them in before the thing collapsed.

So they're going to be just fine. Not only that, put this next piece up on the screen from CNBC. Silicon Valley bank employees received bonuses literally hours before the government takeover. Now, I've seen a lot of people say, well, this was from work that they did in 2022, et cetera. Okay, come on. Hours before the government takes over, you're doling out cash bonuses, which again, could be going to those depositors to help make them whole. No. Okay. Got one more for you, though. And we had David Sirota do a piece on this over the weekend because I thought it was so important.

But I want to make sure that we highlight this for you as well, because this is as key a part of the story as anything else. Put this up on the screen. Silicon Valley Bank, their chief actually pressed lawmakers to weaken bank risk regulations. This was under the Trump administration. You had, I think, every Republican and something like 60 or 17 Democrats, 12, 60, I've got the numbers here, let me see, vote for this as well. But effectively, the head of Silicon Valley Bank, one of the guys who just cashed in on his his shares before the bank collapsed. He went and pushed legislators to exempt more banks, including his own, from new regulations that were passed under Dodd-Frank in reaction to the 2008 financial crisis.

And by the way, it was successful. So the fact that they got these regulations loosened meant that they were not subject to the same level of stress tests that they would have been otherwise. He argued that SVB's deep understanding of the markets that they serve and their strong risk management practices would lead to them being just fine. They said without changing the regulations, SVB would need to divert significant resources, providing financing to job creating companies and innovation economy to complying with enhanced prudential standards and other requirements. Quote, given the low risk profile of our activities and business model, such a result would stifle our ability to provide credit to our clients without any meaningful corresponding reduction in risk. So he argued, we're totally risk-free.

We've got deep knowledge of this industry. We're good to go. We don't need all these stress tests. It was successful, supported here with 50 Republicans and 17 Democrats. And they faced, because of that, fewer stress tests and other regulations than they otherwise would have been required to face. Yeah, so they weren't even on the trouble bank list, so the FDIC didn't have full visibility into their books. Not only that, but the SVB CEO was actually on the board of the Federal Reserve Bank of San Francisco. He had to resign after the immediate collapse of his own

bank. This was a deeply connected person. I'm rereading the Too Big to Fail book right now by Andrew Ross Sorkin, written, I think it was written in 2009, just a recap of everything that happened in 2008. And it's like, it all rhymes. It's all the same. All these guys were deeply interconnected. They had the cell phones of Hank Paulson and of Tim Geithner, and the financial system stepped in immediately to broker deals to save them. In their view, they were saving the economy. In many people's view, they were saving themselves and saving their bonuses and 401ks. But here's the thing. At the end of the day, the idea that these people were able to dole out, and in some cases,

we're talking here about $140,000 in bonuses per employee, some $20,000 bonuses for lower level. Who knows what the management was given? Now, was it given in cash or in stock? If it was given in cash, every single one of those things needs to get paid back. Sorry. I mean, it's impossible, the idea that you can just be doling out cash at the end. That's like the story of Bernie Madoff, who was giving out $100 million bonuses on the very last day before he was about to turn himself into the feds because he wanted to make sure he could dispel all this cash before he was going to go into jail. All of their behavior lines up. You're really going to tell me the 2022 bonus had to be processed on the very day of the failure. You're really going to sit here and say that you didn't know that the bank was in serious trouble when you were selling up to 32% of all

your stock holdings in the company because that's the vast majority of your comp. That's hard-earned cash, which was pocketed from investors into your pocket, of which you then are now saying, oh, woe is me. I had no idea that it was all coming. This is corruption, pure and simple. The FDIC example you gave is a good one. And I just think also in the future, this is going to be the main fight. Sure, the FDIC rate can go up for the banks. I don't even think that's a bad thing. But they cannot raise rates on the rest of us. And also, if you think about it, with the liquidity crunch now that is happening here, we've got a debt ceiling crisis which is looming. Our economy is in serious trouble right now in terms of getting probably closer to a debt ceiling crunch just because of how much money this might spend if taxpayer dollars do go on the hook.

And second, I mean, the precarity right now of the financial system, already with the lead up to this debt crisis, this has put us in a much worse spot. There was a lot of theorizing that I saw on Twitter that, oh, this all just became political because of the name of the bank and Silicon Valley has become this kind of like boogeyman, whatever. If this had been called Farmer's Bank, it would have been no problem. I think it is the polar opposite. The fact that you had so many wealthy and well-connected individuals tied into both parties, tied deeply into the financial banking system, some of the most powerful people in the country and really in the world, that led them to react way faster.

And it allowed them to be persuaded that, oh, they have to do this and they have to backstop the entire system or else there's going to be complete calamity. I have not been persuaded of that case. And this is also the siren song that they always sing that, oh, we have to do the bail outs because there's no other choice. Otherwise, there's going to be complete economic calamity. So I'm a little bit skeptical of that case being made, given that we have seen it before in the past to people's individual and personal benefit. Yeah, I think you are exactly correct.

All right, we have a great journalist to break down what he thinks of exactly what the federal government is doing and explain it in plain terms. And also, he has a great piece, this is Matthew Zeitlin that we're going to bring in with Grid News. It's a great piece explaining how exactly we got here, what the promise of Dodd-Frank financial reform was, and how it is that now we're, what, 15 years down the road and we're doing bailouts once again. So how did that ultimately fail? So let's get to it. Matthew Zeitlin, thanks for joining us. Good to see you, man. Thanks for having me. Good morning. Yeah, of course. So we did our best to explain what action the U.S. government is taking, but I would love for you to just explain in the plainest terms possible what has just been decided. Yeah, so there's two parts of this. The first is that any deposit holder in Signature Bank or Silicon Valley Bank as of this morning has full access to any amount of money they deposited in those two institutions, even if it's above $250,000, which is the FDIC insurance limit.

There was like a lot of doubt about this over the weekend, but that is now totally, it's like those money claims are good. You have access to any money over $250,000. The second thing is arguably more expansive, but a little harder to understand. Any bank now can go to the Fed and host assets they have, treasury bonds and agency mortgage backed securities, and get money back. It's a lending operation. It's essentially a way to take their current long-term assets and temporarily for a year or so, turn them into cash.

The idea here is that if any bank is coming under pressure from depositors asking for withdrawals, they can have more liquidity, which means that they have more cash at hand to process the withdrawals. But obviously the idea here is to make it seem like banks that are solvent today will still be solvent tomorrow and that if you're a depositor, you don't have to get panicky like what happened with Silicon Valley Bank last week. Right. And so, Matthew, one of the things we've been talking about is that this sets a tremendous precedent now for basically all banks in the United States. They now effectively, the U.S. government is guaranteeing the deposits of all $9 trillion in banks across the U.S. What does that mean for the banking system as a whole? What are the perverse incentives, the moral hazard, if you wish. So the main thing this does is that any role that depositors have

in ensuring bank safety and soundness and security has been wiped out. Pretty much what the government here is saying is that all depositors are like they have insured deposits, even though the system only funds itself for insurance, these premium claims that banks have to pay the FDIC for deposits up to $250,000. So that's like a really big deal. And the second thing is that the government is essentially saying that if you're solvent today, like you're going to be solvent tomorrow. And that's a, even though the federal government won't be necessarily, quote unquote, like spending money on these lending operations in all likelihood, tomorrow. And that's a, even though the federal government won't be necessarily quote unquote,

like spending money on these lending operations in all likelihood, it is like a massive subsidy to the kind of regional banking sector. So it is a big deal because the banks have not had to give anything up in exchange for this. There's no added regulation or anything like that. I mean, typically that's the deal. It's like, if you want to offer FDIC insured deposits, you get overseen, supervised by the FDIC. And like that level of protection has like really gone up. But the kind of the obligations that banks have to the system as a whole has not gone up in turn. Yeah. Talk about that piece a little bit more. that Matthew had up on the screen, because as you were pointing to, they have paid into the FDIC to this insurance fund with funds sufficient to, you know, insure $250,000, the first $250,000 of their deposits. But they actually, when the FDIC right here hiked its assessment rate for

the deposit insurance fund last year, bank trade groups opposed it, saying that it was, quote, a preemptive strike against a non-existent threat. Clearly, they were incorrect about that. Now, my understanding is the FDIC went ahead and hiked its assessment rate anyway. However, it's nowhere near sufficient what they've been paying in in order to backstop all of the uninsured deposits across the country. So I know that the government is going to great lengths as, oh, the taxpayers' funds aren't on the hook, like this is completely funded by Wall Street payments, et cetera. But if we're de facto backstopping the entirety of the banking system and all the deposits held therein, doesn't it, you know, sort of beggar belief to imagine that taxpayer funds are not at least sort of on the

hook, even if they may not be directly spent in any way. Yeah, I mean, I think sometimes just like looking at kind of the flow of funds from, you know, the Treasury to the banks doesn't really capture the value of what's been transacted here. I mean, like this is obviously very, very valuable to banks and bank depositors, even if literally no money is actually spent, like the deposit fund could be, stay at $125 billion. And yet a huge amount of value has been given over to depositors. You have to remember lenders to banks and then the banks themselves, which are now in a kind of more secure situation.

So I think what's happening here is that after 2008, there was a huge political backlash to bailouts. And the way that was captured in the post-2008 laws and in what regulators want to do is that they never want to be in a situation where they're seen as be giving taxpayer money directly to insolvent institutions or lending, huge lending facilities to insolvent institutions. So what I think we saw Sunday night was a 2008 style action, but kind of drawn within the lines of what regulators interpreted made the public angry about, you know, things like TARP and support for AIG and support for things like Citigroup and stuff, where they felt like they're rescuing failed or failing institutions, and the management wasn't treated harshly enough.

Shareholders still survived. So if you look at it from kind of the government perspective, what they're saying is, look, the SVB shareholders went to zero. Their management has gotten fired. There's not really taxpayer money on the line because it's raised from the banks. But a huge amount of value has been transferred to the entire banking sector from ultimately

the public, even if it's not so much public money, but it's kind of like public authority that comes from all of us to them. It's like whether or not it's a bailout is kind of a semantic issue, but it's a huge amount of support. It's obviously a bailout. Andrew Ross it's a bailout is kind of a semantic issue, but it's like a huge amount of support. Right.

It's obviously a bailout. Andrew Ross organizes a bailout, right? So let's go ahead and put this up there on the screen. You wrote a good piece, how 2008 reforms did and didn't prepare us for the Silicon Valley bank collapse. Can you just roll through that? I think a lot of us, I especially, did have questions. I was like, hey, when our breaking news segment here, I said this is going to be a big test for Dodd-Frank. As I understand it, they weren't even on the troubled bank list. So how did regulators miss this? How did the Dodd-Frank architecture respond? Yeah. So this is really

important. Almost as soon as Dodd-Frank was passed in 2010 and kind of the rules were written over the next few years, banks of around Silicon Valley bank size, these would be like large regional banks that are still substantially smaller than JP Morgan's of the world. These are banks with around $50 billion to $250 billion in assets. And at the time, Silicon Valley Bank had $40 billion, and now they had last week over $200 billion. What they were arguing is that all these rules that were implemented on the largest banks to make them kind of more resilient to crisis

and then make it so that if they fail, they have this kind of special process such that the entire system wouldn't collapse around them. Those rules were being applied to this size of bank, and they were very, very angry about it. And the argument they were making is that they were lower-risk institutions and you're too big to to fail banks and two, that they could be resolved through the normal FDIC process. I mean, the CEO of Silicon Valley Bank, when the bank was one fifth the size as it was last week, was saying was testifying to Congress to this effect. Regional banks are quite powerful because they're kind of locally rooted. And so legislatures really listen to them. Anyway, so in 2018, the Trump administration, with the support of a smattering of moderate Democrats, passes this rollback, partial rollback of Dodd-Frank, which really aimed at kind

of the Silicon Valley bank and smaller institutions. And a big thing that they did was say that they didn't necessarily need to maintain this thing called liquidity coverage ratio, basically maintaining kind of high quality liquid assets, stuff that can be turned into cash super duper quickly in case there's like a bank run going on, more or less, and that they didn't have to do as much planning for their failure. Now, whether those rules would have prevented this like full on run on a bank that we saw last week is questionable. But the central intuition behind this deregulation that these banks were less risky than the JP Morgans of the world and that their failure to be resolved through the normal FDIC process turns out to have

been completely wrong. Got it. I think that's very well said. Let me ask, this is an impossible question to answer, but I would love to hear you muse on it. What if they did just follow the normal process for resolving the situation, which is, okay, $250,000 insured, backstopped by the FDIC. You could get that on Monday, no problem. The rest of the assets of the bank are sold off and used to make depositors as whole as possible. The back of the envelope calculations I saw was that they'd probably take like a 10 percent haircut. They'd get about 90 percent of their funds, even the ones that were uninsured. If we went that alternative path, what do you think would have happened? I think there would have been a lot of, there's two issues. One is that the worry was that there would be

companies that had payroll issues because they were using Silicon Valley Bank as like a transacting bank just to kind of move money from their business to their customers and clients and stuff. Now, I don't know if that would have really happened because if everyone was getting 50% on Monday or Tuesday, they probably could have made it work. The worry was that other banks that had a similar kind of risk profile to Silicon Valley Bank would also be under tremendous pressure that people would withdraw from them and then put their money into kind of bigger, safer banks, the JP Morgans of the world. And it would kind of be this cascade of bank runs. The issue is that it's just so hard to know whether or not that would have happened,

but it was definitely a worry. I think what's really interesting is that it seems like the federal regulators, sorry about that, were not able to find a buyer for the bank, which is ideally what they try to do is that over the weekend, they find someone to take over the whole thing. This is what happened with Washington Mutual when it failed in 2008. It was a $300 billion bank, but they were able to kind of tie it up with J.P. Morgan. That did not really seem to be in the offing over the weekend, or else they would have done it

because it's kind of the easiest way to do this. But it does, I think, indicate that there is kind of more pressure on the system than in a typical bank failure situation. And finally, Matthew, I'd love to get from you, um, you know, based on the actions that the government just took in this non bailout bailout, we've effectively not only backstop the entirety of, you know, deposits insured and uninsured across the country. Um, we also have effectively, especially with, you know, including signature

bank in this effectively deemed all banks too big to fail. How should that be reflected in a different policy approach? Because I think the thing you pointed out at the beginning, which is so important, is that they're being given tremendous value and not being asked to change anything at this point. Now, we expect President Biden to speak today. We'll see what he has to say. But how should our banking architecture reflect this new reality? I think the first thing that we'll see happen is that there's going to be a big push to kind of reexamine this 2018 Dodd-Frank rollback. And this idea that these medium-sized banks are not systemic threats is obviously just not true.

We've kind of done a dry run of this and we found out they are. And then I think we're going to see bigger questions where a world in which deposits are assumed to kind of always be safe. And then it's like, what is the role of a banking institution? So they're essentially getting this subsidy from the government, not so much in being kind of this extraordinary action that happened the weekend, but they're getting the right to essentially create money, money like claims, and that they're getting this indefinite subsidy in order to do so. And I think it's really opened people up, this idea that like,

why can't the government do this to some extent? Now, are we going to get some kind of postal banking or kind of basic Fed banking for everyone overnight? No, but I think it's really kind of opened people up to the possibilities that, you know, the government and the banking system are really kind of completely entangled with each other in this very, very basic level. And then once you realize that, it kind of opens up the field of possibilities. So people will be talking about this. Whether it turns into legislation is obviously very hard to tell. Yeah. I mean, if the taxpayer is ultimately and the U.S. government ultimately 100 percent on the hook, why are they getting to benefit from all

the gains while the taxpayer is backstopping all the losses? It ends up being a sort of an insane situation that's just been revealed. Yep, absolutely. Matt, it was really nice talking to you. Go ahead and check out. We'll absolutely. Matt, it was really nice talking to you. Go ahead and check out, we'll put a link to his Twitter and to link to the story and all that in the description. Appreciate you joining us, man. Thank you. Thanks so much.

Had a great time. You too. Pleasure. See you, man. At the same time, we're not going to take our eye off of a very important story. Norfolk Southern, the CEO was called to testify before the Senate and gave some totally ridiculous answers.

It was at the same time that that bipartisan railway safety bill is now being considered before the bigger chamber. So as we can recall, it was endorsed by bipartisan members, both by the Ohio delegation, the Pennsylvania delegation, as well as some other Republican senators. Now, the bill has been endorsed by President Biden. It remains to be seen whether it can garner enough Republican support. And it was in that vein that Senator J.D. Vance of Ohio actually gave testimony geared specifically towards Republicans who had the idea that regulating Norfolk Southern even more might violate free market principles. Here's what he had to say. Now we are faced with a choice. With this legislation and how we respond to this crisis,

do we do the bidding of a massive industry that is in bed with big government, or do we do the bidding of the people who elected us to the Senate and to the Congress in the first place? I believe that we are the party of working people, but it's time to be the party of working people. We have a choice. Are we for big business and big government, or are we be the party of working people. We have a choice. Are we for big business and big government, or are we for the people of East Palestine? It's a time for choosing. Let's make the right one. So there were a couple of important things that he said there. Time for choosing, for most people are not going to know, but it's a very famous, actually, Ronald Reagan

speech that he gave. I believe it was like 1964. It was after the Barry, I think it was during the Barry Goldwater run. And he said, this is a time for choosing, like, are we going to be mealy-mouthed Eisenhower Republicans or are we going to be hardcore Goldwater? So that was kind of an interesting, for people who know that was a real turn of phrase. The second part, which is very important, was that that was geared specifically towards going after the people who justify cronyism under free market concerns. As the, you know, what's his name, Troy Nels, he's the House Transportation Committee ranking member for, or I believe the chairman, the Republican side,

who said, well, hold on a second. We don't know if we need more regulation here. Right. And as, you know, he pointed out in his testimony, he's like, we bailed out their union support. We have deregulated this industry. It is one of the most in-bed industries outside of like aviation and apparently banking that the government is totally involved in. So the idea that we don't get to set proper safety standards is outrageous. Of course we do.

Yeah. Well, it's been quite a month in terms of recognizing the importance of intelligent regulation and the detriment of political capture and corruption. And, you know, I was skeptical of J.D. Vance's initial comments. It took a while to come on East Palestine. He went on Tucker and he was more fixated on like, oh, this is about wokeism, et cetera. In terms of the bill, in terms of what he's saying here, this is right on the money. And it's very exciting. It's very encouraging to think that there could be this kind of bipartisan collaboration. This could have implications for the banking system as well, as we move forward and say, OK, what is this new world that we live in? What does it look like? What should it look like? Hey, is there a role here for someone who's willing to speak these

kinds of truths to partner with Democrats, even if it is in a limited way as it has been thus far. So it's really interesting to see. And there's a real fight brewing within the Republican Party over whether they can actually stand for a different approach on economics or whether it just all ultimately collapses into culture war as it has been mostly over the past number of years. I would hope not. I mean, the fact, though, that Senator Fetterman, well, his staff signed on, that you had the Democratic members from Pennsylvania, the Bob Casey sign on, that Sherrod Brown. I mean, these are serious people who are interested in it. The President Biden endorsing the legislature.

You don't see that all that often, and especially when spearheaded. The real question, again, is going to be those Republican lawmakers. in endorsing the legislature. You don't see that all that often, and especially when spearheaded. The real question, again, is gonna be those Republican lawmakers. But then the secondary question is, are these actual CEOs, these executives, the people responsible for this, are they gonna pay?

And are they actually gonna get held responsible here? Because who, by the way, it's been what, more than a month now, almost since this derailment? What is going on? I mean, do we know what the toxic levels are? No, we don't. In water, are people dead or not? I mean, can we trace, like, poisoning of these pets now officially?

Like, you know, just think about it. Look at what happened with the banking system and look at this. Like, these people totally, almost basically forgotten by financial media and many others. Yeah, listen. I tweeted this, but I'll say it here as well. Whatever you think of the SVB bailout, it took a weekend for effectively wealthy venture capitalists to get their insta bailout from the government. And people in East Palestine still do not have a real answer about whether they and their kids have been poisoned, whether they're going to face elevated cancer risk down the road, whether they can go back to their homes, their homes, which values of which are now completely decimated, no bailout for them on the way.

So it shows you once again, when the government wants to act and when it involves wealthy, influential people, well, hey, it just takes a weekend and we've got, you know, trillions of dollars effectively backstopping the entire system. When it comes to people who are less politically important, less connected, less well-off, well, you know, it's a month down the road and the best that they've done, and this is outrageous to me, they are now finally, the EPA is like, oh, maybe we should test for dioxins, which are incredibly toxic and linger and have known incredibly detrimental impacts. They're finally now testing for it, but they're still asking Norfolk Southern to spearhead the testing, the polluters themselves. It's absolute insane. I

just, I can't even wrap my head around it. So it's a clear contrast in response and in care and concern from our government on really on both sides of the aisle towards, you know, the way the banking sector was handled and the way these people in East Palestine have been dealt with. Yeah, I think you're very right. Senator Bernie Sanders also shredded the CEO in testimony. Did a great job. Let's take a listen. Norfolk Southern provided $10 billion in stock buybacks recently. Can you tell the American people and your employees right now that in order to improve morale in your workforce, that you will guarantee at least seven paid sick days to the 15,000 workers you employ? Senator, with our latest agreement with our employees, which included a historic 24% wage increase and access to premium health care benefits, we immediately pivoted to talking to each of our local... I've been deeply involved. I introduced the amendment

on the floor. I know the issue. Senator, I share your focus on our employees. I will commit to continuing to discuss with them important quality of life issues with our local craft colleagues. And all due respect, you sound like a politician here, Mr. Shaw. So will not say that he will increase paid sick leave. This, of course, was the central issue in terms of a rail workers threatening strike that was ultimately crushed by Biden and the Democrats and in combination with the Republicans. So, you know, Senator Standards still saying, hey, listen, you all are profitable beyond belief. You have plenty

of money floating around to dole out to your executives and to your shareholders through stock buybacks, which, by the way, should be banned and illegal. How about you use this opportunity to provide seven paid sick days to your workers? Is that too much to ask? And, of course, the CEO has nothing to say, will not commit to it. No, and I think this one is just like the banking system. So corporate corruption, a real key theme of the show here. And I just, I can't help but look at this and also know one thing,

that that bill already, it faces a very difficult climb up. Like, are you really going to be able to get nine Republicans? We've only got four that have signed on right now. President Biden endorsing the bill, frankly, probably makes it more difficult because now they can say, oh, we're standing up against Biden. Woke big government trying to regulate the railroad. And then same thing on Norfolk Southern. I mean, they're not even getting pressed on the stock buyback issue. It's like with the banks.

I have zero confidence that any follow-on regulation will actually occur to stop this type of behavior and that will not transfer the increased FDIC fees to every single one of us. They will continue to operate not only business as usual, business as better because now the losses on your balance sheet are backstopped and guaranteed by the Fed. The increase in the rates, it doesn't affect them. It only affects you and I and our customers and the people who watch our show, blue collar people out there getting fired right now because the Fed is raising rates and their companies can't afford to employ them. That's the nuts part. Like only us, those who are merely not in the very, very top of the system, we're all the ones who get to pay the price for all of these big policies. But when they fail, they get to pay themselves bonuses. He appears before the Senate, quote, sounds like a politician.

I mean, look, the fact that Guy Steele even has his job is crazy in this environment. Yeah. So I don't know. I feel just disgust on days like this. The Fed piece is so critical to underscore because it really does reveal everything. They have had a stated overt policy at the Fed of crushing the labor market, increasing unemployment, and slowing wage gains. Their explicit policy is to kill jobs. That is the policy of the interest rate hikes, which has not been very successful in terms of dealing with inflation, which is what we actually want them to deal with.

But their explicit policy is we want to kill jobs here. But the minute there were concerns about job loss in Silicon Valley with these venture-backed companies, then they spring into action. It just shows you, it just shows you who matters, who they care about and who doesn't. And the difference between the response with Norfolk Southern and with East Palestine versus the response in the banking system also shows you who counts, who matters, who they can marshal straight answer about tests, can't get real health care, and have no bailout on the way for them in terms of their homes and their businesses and any potential medical bills down the road. So it really is a disgraceful and revealing moment for our country about the way that all of this works. Yeah. At the same time, we wanted to cover some interesting comments

from former Vice President Mike Pence. Of course, famously on January 6th, you had people who were in the Capitol who were chanting, hang Mike Pence. He was a focus of a lot of ire because theoretically, the idea that took hold in the maggot base is that he could individually stop the electoral count and he could sort of throw things towards Donald Trump. Now, he certainly didn't feel that he had that authority and most people don't think that he had that authority.

But anyway, that's how he becomes the center of attention on January 6th. Finally, at the gridiron dinner, which is like the most swampy, insidery thing of all time, He made some fairly strong comments about his former friend and colleague there, Donald Trump. Let's go ahead and put this up on the screen. Here's the media headline. It says angry Mike Pence blasts Tucker Carlson's January 6th revision, levels Trump for endangering his family and says history will hold Donald Trump accountable. Let me read you specifically the comments that are reported here. We can't, there is no video allowed inside of this swampy clubby dinner, but there are a lot of reporters there. So specific comments definitely make their way out.

He said in regards to Tucker Carlson's portrayal of January 6th, quote, tourists don't injure 140 police officers by sightseeing. Tourists don't break down doors to get to the Speaker of the House or voice threats against public officials. The American people have a right to know what took place at their Capitol on January 6th. I expect members of Fourth Estate to continue to do their job. He said, make no mistake about it. What happened that day was a disgrace and it mocks decency to portray it in any other way. So that was sort of in response to the Tucker Carlson portrayal of events. He also said about the president, former president, I was not afraid, but I was angry. President Trump was wrong. I had no right to overturn

the election and his reckless words endangered my family and everyone at the Capitol that day. He goes on to say, I know that history will hold Donald Trump accountable. What did you make of him making these comments, the timing, the venue? I'm not saying he's wrong. I'm just like, do you actually have any political sense whatsoever? A, why would you choose the gridiron dinner place to criticize Trump? The literal peak of the swamp. This is the closed door, white tie and tails dinner that anybody who's anybody in Washington goes to. I saw some of the highlights on Instagram, General Milley and all those, you know, the generals and all those other people are all congregated with the TV news hosts that are all together. At the same time,

in terms of what he's laying out, this is not a popular view in the Republican Party. Now, it might be a popular view in the general election, but you need to win a Republican primary first. So I just don't know what his angle is. Like, once again, his only real path, I guess, is to shore up the evangelicals and then get all of the anti-Trump vote behind him. That's why he consistently has some 7% or so of the Republican electorate back him. But we've already gone through a cycle where GOP primary voters by and large backstop the steel candidates and those who have the Tucker view of January 6th than those who have the Mike Pence view. So you're intentionally putting yourself on the side where you have the most

competition, the Vivek Ramaswamy, Nikki Haley, Tim Scott, all these other candidates. So what is the political calculus behind doing this? Now, if you just think it, that's fine. Totally fine. But then don't delude yourself into thinking this is a viable path to the GOP nomination. That was my takeaway from it. Yeah. I certainly agree with all of his comments here, no doubt about it. But it's like, it's a little late, buddy. Yeah, I know. You know, the cake is kind of already been, you've allowed the cake to be baked on the Republican side about their, the base's view of January 6th, the base's view of stop the steal, the base's view of you even and your actions on that day. And so, I mean, the only thing I can, maybe it's just not political calculus.

Maybe he just wanted to say what he actually thought. But it is, you know, it would have been more useful, like right after the fact. And at the time, there was a little bit of dabbling from Republicans, Mitch McConnell and others decrying the events of that day. There was a little bit of a thought about maybe this is our chance to get rid of Trump. But ultimately, everybody's too afraid to actually have any sort of collective action to move on from this guy. And so you end up with effectively weak attempts like this that are going to do nothing in terms of dislodging Trump,

but are certainly going to make it more difficult for Mike Pence to be successful in a Republican primary. Not that I thought he was going to be successful in a Republican primary anyway. So it's sort of without consequence in that regard. Yeah. It's just like, what are, what exactly are we doing here? Are we running for president or are we moralizing? Because, uh, you know, that's just not how it's going to work at the end of the day for you. And Pence in general, this is his, you know, latest blast against Trump. But here's the thing. He still can't even say his

name. He still doesn't say his name yeah he just says he'll be held account what does that even mean yeah say it make the case i stood by him for four years he betrayed me he's a coward say something like that that's actually a strong point you know who's gonna hold him accountable because it sure as hell doesn't feel like it's gonna be you like history what is it like what what does that mean it doesn't really mean anything. And so it's a very squishy, belated, half-hearted attempt to draw some blood here. And, you know, and then you look at, like, the issue set that Mike Pence has staked down in opposition to Trump with, like, oh, Trump is going to protect Social Security and I want to privatize it. You know, Trump won't do a national abortion ban, but I will. All right.

Good luck. OK. It's like, well, you're actually making a pretty good case for Trump. So, all right. Crystal, what are you taking a look at? Well, guys, today we have extensively covered the collapse of Silicon Valley Bank. We talked about the concentrated risk that they took on. We talked about the calls for bailouts, the potential contagion,

and crucially, the political corruption and capture that led to that bank winning looser regulations during the Trump years. But for some, this isn't a story about money and power. It's about something else altogether, the dreaded, all-encompassing wokeism. So I don't have any specific information about any Florida bank similar to Silicon Valley Bank, and hopefully that remains the case. Maria, it just appears to me, this bank, they're so concerned with DEI and politics and all kinds of stuff. I think that really diverted from them focusing on their core mission.

Total nonsense. Ron DeSantis was not the only one, though. Donald Trump Jr. tweeted, SVB is what happens when you push a leftist woke ideology and have that take precedent over common sense business practices. This won't be the last failure of this nature so long as people are rewarded for pushing this BS. Of course, that's a very convenient take since the deregulation pushed by industry, including SVB, was signed into law by his dad. And that is a huge part of this story. Now, the Daily Mail and the New York Post are both running with this wokeism narrative, though. Here's the New York Post. They say, while Silicon Valley Bank collapsed, top executive pushed woke programs. Apparently, there was some lady involved in risk management

at the bank's UK branch who'd engage in some classic corporate virtue signaling, like launching a pride campaign, a blog that had an LGBTQ focus. What does that have to do with the stunning collapse of the bank and the subsequent debates on bailouts and the subsequent actual bailout? Absolutely nothing. This alleged woke person did not force the bank to lobby Congress on reducing stress tests. They didn't cause the Fed to hike rates, popping the Silicon Valley bubble. Their pride month festivities had nothing to do with foolishly putting the bulk of the bank's cash into interest rate sensitive treasuries. Their blog posts did not create the Silicon Valley herd mentality, which sparked a bank run. The presence or lack of wokeism is an irrelevant sideshow here. But plenty will fall hook, line and sinker for this laughable distraction,

because for some entirely two online people led by a cadre of right-wing media and political elites, opposition to wokeism has become an all-consuming, all-encompassing worldview, blotting out any other potential political understanding. Anti-woke brainworms lead to at least as goofy and authoritarian an approach to politics as woke brainworms do. Anti-wokeism is goofy

in that it would lead you to look at a train crash and cover up caused by corporate greed and instead fixate on some dumb comments about white construction crews, or to look at a bank crash caused by deregulation and corruption and think it has anything to do with some stupid Pride Month celebration.

Anti-wokeism is authoritarian in that it paints everything as either good or evil, this black and white view of the world complete with existential warnings that then justifies illiberal tactics, things like banning books, curriculum, and public artistic expression. Now, I consider myself to be an opponent of wokeism.

I have called out cancellations of people I profoundly disagree with. I've stood up for the rights of comedians to make edgy or even offensive jokes. I've decried the hollow identity politics that sells racial diversity in elite circles as a panacea for working class Americans. I've opposed the oppression Olympics type of politics

that has human beings vying for victimhood points based on immutable personal characteristics. And I have decried the 1619 Robin DiAngelo grifter types who push an ideology that is so woke, it's actually racist. Arguing things like math is white supremacist and selling their diversity courses, which don't accomplish anything

except making a handful of so-called anti-racist consultants wildly rich. But the answer to that authoritarian trend among liberals and left liberals is not an equal and opposite myopic authoritarianism on the right. Yet that is in fact the direction which has now been fully embraced by plenty. The goofy distraction anti-woke mode is most clearly

demonstrated by presidential candidate Vivek Ramaswamy. He has launched his bid based on his claim to being the CEO of anti-woke. Now the fundamental unseriousness of this ideology is demonstrated by the mess that is Vivek's platform. When Sagar and Marshall interviewed him about his key policy priorities, he didn't focus on jobs, health care, or corruption. Instead, he name-checked ending affirmative action in federal government hiring and a VEG program of building national identity. Now, however you feel about affirmative action, ending it isn't going to solve our core problems in the same way that instituting it did not solve our core problems. And people can't buy a house or afford their prescriptions on national identity. The authoritarian anti-woke mode is most clearly demonstrated by Ron DeSantis. He too is hoping

to use anti-wokeness to launch him into the presidency. According to PEN America, thousands of books were banned across 32 states this school year, and Florida, led by Ron DeSantis, led the way. Now, DeSantis also banned the teaching of certain concepts in school, pushed to limit tenure for professors, and is working to mandate Western civilization courses in public colleges. So rather than embracing openness, debate, and tolerance, he's actually using the force of government to silence ideological opponents and mandate the teaching of his own preferred ideology. And to make the direction completely clear, he also passed a law that limits protest. Now, there is, of course, a need to counter wokeism. I am on board with that.

But the opposite of wokeism is tolerance. It's open debate. It's an embrace of real democracy that devolves power from elites to the American people. It would consistently decry censorship rather than just when it happens to one's ideological allies. It would value nuance and solidarity among the population rather than the vicious politics of personal destruction embodied by wokest cries of racist and anti-wokest cries of groomer. It would shift consciousness from individual villains to systems that we can work together to reform and change. And it would certainly not counter a woke cult with a new anti-woke cult. But wokeism and anti-wokeism are what I would call anti-politics because they keep their adherence focused on individual level grievances about the ideology or personal traits of this executive or that executive versus the type of collective problems which we can actually deal with through small d democratic politics. They keep us all fighting online about who's good and who's bad.

We feel like we're doing politics, but we aren't. Not really. Because there are no real society level solutions in woke or anti-woke fundamentalism. It's only an endless power struggle against your ideological adversaries. If America is an irredeemably racist country, there's no political cure, and progress can only be won through pushing irredeemably racist people out of the public square. And if the woke mind virus is destroying America

and liberals are irredeemably woke, well, then you may just see Marjorie Taylor Greene's suggestion of a literal secession via national divorce as the only possible workable solution. Note how all of this is unbelievably convenient for those who benefit from the current disgusting status quo. Nothing could be better for Wall Street crooks, corporate price gougers, and corrupt politicians if the whole nation is squabbling over some window-dressing diversity initiative or their phony ESG environmental commitments. Oh no, don't make me put short-term stock prices above my bullshit greenwashing. That'd be terrible. Whatever will

we do if we have to take the meaningless Black Lives Matter banner down from our website homepage? All while they pass another corporate tax cut and deregulate another key industry. Bottom line here, wokeism and anti-wokeism now deeply confuse our politics. Because they are a device of politics, that's okay. But they have the divisions all wrong. They put neighbor against neighbor, community against community, when we should all be banding together to fight against the elites who have hijacked our democracy. That is the real way to fight the so-called woke mind virus. Sagar, I thought I was going to lose my mind. And if you want to hear my reaction to Crystal's monologue,

become a premium subscriber today at BreakingPoints.com. All right, Sagar, what are you looking at? Well, if you had asked me three years ago in the middle of lockdown whether we're still debating the origin of COVID, I would have said that you were nuts. Clearly, it would have been settled. And yet, March of 2023 may go down as one of the most significant times in COVID history, as when the truth actually began to come to light. For nearly two years, a stalemate was reached where people who were banned from social media for the lab leak theory had their accounts restored. The media basically ignored the

reams of evidence and emails that showed a full-scale cover-up by Dr. Fauci, by Peter Daszak, the NIH, and the scientific community of LabLeak, and it seemed that we would all just, quote, never know. But then the Republicans actually won a slight majority in the House of Representatives. Things began to shift. The GOP had made it known it wasn't going to drop its investigation on Dr. Fauci

in the origin of COVID. Thus, the intelligence community began to prepare documents they knew inevitably would be subpoenaed. Lo and behold, it turned out that for literally months, the Energy Department and the FBI were sitting on direct intelligence assessments that COVID did in fact leak from the lab. This was extraordinary and yet met with the typical treatment by the media. Oh, it was only low confidence. Oh, but other intelligence agencies don't agree, as if all intel agencies are created equally. Again, it's worth noting that the energy department people who came up to this conclusion are the only ones tasked with actual lab safety.

Perhaps even more unsurprising, the recent revelations have caused the supposedly retired Dr. Fauci to come out of hiding to defend his reputation and his life's work. Gain of function research. Fauci, we need to remember, was a chief proponent of gain-of-function research at the NIH. He personally overturned the Obama ban on gain-of-function. He funneled millions of dollars to his pet projects, to scientists across the United States, and to the Wuhan lab to not only continue it, but expand gain-of-function after the pandemic. The lab leak itself is not just about how COVID started, as important as that is. It's about protecting his scientific legacy, the idea that scientists can play God, that they can bioengineer viruses and engineer the cures for future pandemics. But as Dr. Redfield laid out, a former CDC director, in his most recent testimony, gain of function has never, to his knowledge, been used to stop a pandemic.

Instead, it most likely is the one that started the one of the worst pandemics in modern history. Let's take a listen again. So one other path of questioning for you, Dr. Redfield. Proponents of this research claim it may result in vaccines or maybe even stop a pandemic. Dr. Redfield, has gain-of-function created any life-saving vaccines or therapeutics to your knowledge? Not to my knowledge. Has gain-of-function stopped a pandemic in your opinion? No, my knowledge. Has gain of function stopped a pandemic in your opinion? No, on the contrary, I think it probably caused the greatest pandemic our world has seen. Do you find any tangible benefits to gain of function research at this

time? I personally don't, but I do want to stress I think the men and women that support it are people of good faith because they truly believe it's going to lead to a potential benefit. I disagree with that assessment. This more than anything was what Fauci could not stand and his full-fledged media campaign immediately kicked into high gear. He played the game where he went on Fox to pretend he was going to get asked real questions, but picked host Neil Cavuto, who I guess, let's just say, been very sympathetic to the Fauci throughout his tenure on Fox. Let's take a listen to that interview. Take me out of the picture, Neil, and look at a whole array of virologists and scientists who do research that's absolutely critical for the health of the country. Some of that involves manipulating organisms. You want

to call it gain of function. It really is not in many respects, but when it is, it needs to be very well regulated. If you shut off all gain offunction research, did you get the flu shot this year, Neil? If you did and you got it from an influenza vaccine, that was gain-of-function that made that influenza vaccine. That is what it's all about. The entire thing is about protecting the scientific funding mechanism he created with his cronies in labs across this country. Conveniently, it's also used by big pharma companies, like he said, to create flu vaccines and other vaccines that are routinely taken by millions across this country. Maybe it's right. Maybe it's wrong. Something we have learned unequivocally, though, from all of this, you cannot trust them. You have to distrust, verify,

look at the data that you've just verified, and then verify it's the real data to make sure that what they're telling you is real. And the real crescendo, though, of the Fauci media campaign came in his second home, CNN's Jim Acosta's show on this weekend. Let's take a listen. We've seen Elon Musk tweet that his pronouns, he's the owner of Twitter, that his pronouns are prosecute. Fauci, others in the GOP have talked about arresting you and prosecuting you for your handling of COVID. What's your response to that, your response to Musk? And what has that been like for your family? Well, I mean, there's no response to that craziness, Jim. I mean, prosecute me for what? What are they talking about? I mean, I wish I could figure out what

the heck they were talking about. I think they're just going off the deep end. That's the answer to your first question. It doesn't make any sense to say something like that, and it actually is irresponsible. Of course, it it's gonna have a difficult effect and a deleterious effect on my family. I mean, they don't like to have me getting death threats all the time. Every time somebody gets up and spouts some nonsense that's misinformation, disinformation, and outright lies,

somebody somewhere decides they wanna do harm to me and or my family. As always, Acosta is too low IQ to ask a real question, and Fauci plays the lowest card, conflating criticism of him with the safety of his family. Now, of course, if crazy people want to actually attack Fauci, that's bad. But you can't blame pressing him for questions

on one of the most significant events of the century on attacks on him. As for prosecuting, last time I checked, lying to Congress under oath is actually a crime. And if you recall his myriad exchanges under oath with Rand Paul, he pretty much is dead to rights a liar in trying to say he never funded gain-of-function research at the Wuhan lab or anywhere. This is the ultimate canard. He never funded gain-of-function research at the Wuhan lab. But as he says on Fox, but did you know that gain of function is vital for the flu shot? Which is it? Do you defend it or not? He won't say it, and he'll never take an

interview that it seems where somebody knows the difference or even the time to really get into the weeds on that question. But shouldn't mistake that as well as Fauci not being on the defensive. As you saw with his most recent appearance on Anderson Cooper, the Energy Department's conclusion has actually forced even them to ask him about it. The more actual raw information that comes to light, like the emails that show he prompted the initial cover-up and the intel agencies coming to the conclusion it was a lab leak, he has to answer questions. He is now using the years of false capital that he built up during the pandemic to do what any egomaniac like him wants. He wants to die a hero, lionized by the press,

a savior when he may be the pandemic's biggest villain. Crystal, actually, the House of Representatives just voted yesterday to decribe- And if you want to hear my reaction to Sagar's monologue, become a premium subscriber today at breakingpoints.com. Thank you so much, guys, for watching. Really appreciated it. Shout out to everybody signing up,

taking advantage of the new Spotify full show. I know a lot of you are liking it. If you need much, guys, for watching. Really appreciated it. Shout out to everybody signing up, taking advantage of the new Spotify full show. I know a lot of you are liking it. If you need the instructions again, just go to the top of the show, existing premium members, and I laid out exactly what you need to do. Send us an email if you still can't figure it out, and we'll get everything sorted for you.

Otherwise, we'll see you all tomorrow. Camp Shane, one of America's longest-running weight-loss camps for kids, promised extraordinary results. But there were some dark truths behind Camp Shane's facade of happy, transformed children. Nothing about that camp was right. It was really actually like a horror movie. Enter Camp Shame, an eight-part series examining the rise and fall of Camp Shane and the culture that fueled its decades-long success. You can listen to all episodes of Camp Shame one week early and totally ad-free on iHeart True Crime Plus. So don't wait. Head to Apple Podcasts and subscribe today. Have you ever thought about going voiceover? I'm Hope Woodard, a comedian, creator, and seeker of male validation. I'm also the girl behind voiceover, the movement that exploded in 2024. You might hear that term and think it's about celibacy, but to me, voiceover is about understanding yourself outside of sex and relationships. It's flexible, it's customizable, and it's a personal process. Singleness is not a waiting room.

You are actually at the party right now. Let me hear it. Listen to VoiceOver on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. DNA test proves he is not the father. Now I'm taking the inheritance. Wait a minute, John. Who's not the father?

Well, Sam, luckily, it's your Not the Father Week on the OK Storytime podcast, so we'll find out soon. This author writes, My father-in-law is trying to steal the family fortune worth millions from my son, even though it was promised to us. He's trying to give it to his irresponsible son, but I have DNA proof that could get the money back. Hold up.

They could lose their family and millions of dollars? Yep. Find out how it ends by listening to the OK Storytime podcast on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. This is an iHeart Podcast.