Breaking Points with Krystal and Saagar - 3/17/23: Jon Stewart Pushes Mark Cuban On SVB, Carcinogens Detected in East Palestine, Roger Waters Concert Cancelled For Israel Position, McNally Embarrassing Social Media Flirting, Snapchat Crazy AI bot, Gov Gavin Newsom's Connection To SVB

Episode Date: March 17, 2023

In this episode we discuss Jon Stewart giving push back to Mark Cuban's takes on SVB bailout in a recent interview, an independent test in East Palestine, Ohio detected deadly carcinogens in the water, a Roger Waters concert was cancelled due to his past statements on Israel, Lieutenant Governor McNally is caught with embarrassing social media posts flirting with a young man, Snapchat rolls out out a new AI to their app that goes haywire, and Ken Klippenstein (@kenklippenstein) from The Intercept joins to talk about Governor Gavin Newsom's personal financial connections to the SVB bailout.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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So Jon Stewart had Mark Cuban on to talk to him about the Silicon Valley bailout. Mark Cuban is more or less in favor. Jon Stewart had some questions. Let's take a listen. So it's not like there was this big saving or we bailed out the shareholders and all the tech bros came out okay. They got crushed.

They got crushed. There is- Well, I think that's a little misleading because these are not average depositors. So the people that are going to be getting their money back because it's now fully guaranteed by the United States, there are people there that had hundreds of millions of dollars. I mean, you've got Roku that had, I don't know, $500 million in there. These are not mom and pop investors and mom and pop depositors that put in a little bit of money, saving it for a rainy day. Like there are a ton of people. This is like when you read

about those PPP loans that people would get that would say our business, you know, I have a billion dollar business and I got a, you know, $300 million PPP bailout. Like I'm not as concerned about all the shareholders. Yeah, but it's bigger than that. Yeah. OK, the shareholders are different, but the depositors, right? There are giant depositors. But they were giant. This wasn't a bunch of mompaws. Yeah, that's what I'm trying to get at. After that, actually, Mark Cuban's his line drops. And so they're not really allowed to continue the conversation. And by the way, that was former FDIC chair Sheila Baer, who has been critical of the bailout there. But I think he really raises a key point, Sagar, about the difference between the way that people in Silicon Valley are trying to portray this and the way President Biden is trying to portray this is, oh, this is about the little guy.

It's about these mom and pop small businesses, when in reality, inherently in what you did, even just focusing on the depositors, these are all people who had more than $250,000 in their bank accounts. Yeah, I mean, the Roku example is really the perfect one. And also, I mean, I think they keep coming back to this canard where they're like, well, the Silicon Valley bank holders got wiped out, so it's not a bailout. Our friend Joe Weisendahl over at Bloomberg wrote a great explainer where, guys, in the 2008 bailouts, Bear Stearns shareholders, also Citigroup and others lost over 90 some percent of their value. They effectively also, the shareholders, lost their money. Does that not still make it a bailout? So just because shareholders aren't made 100% whole, and even when they do lose value, that does not mean that it is not a bailout. By definition, it is. And so then on that grounds, we have to debate whether it was worth it or not.

And I think that's exactly the issue is that they are trying to present this in a false pretense where it was a super, super special situation. Just trust us. When the normal FDIC process would have worked perfectly fine for most of the customers in this bank. Yeah, I mean, listen, I think there is a reasonable argument to be made about maybe this would have caused contagion. Maybe there would have been a bank run, et cetera. But they're asking us to take that on faith. I want to see the data that shows people

are starting to pull their funds. I want to see the amounts that were involved here and whether there was a real risk of contagion or whether you just had a lot of people who were worried about, you know, their own investments get having, you know, having to take a haircut because the way this has been sold to the American people, and this is what really bothers me, the way this has been sold to the American people, and this is what really bothers me, the way this has been sold to the American people is incredibly misleading. That it's not a bailout, no taxpayer funds at risk. This is just about mom and pop businesses. It's just not true. And even if you put Silicon Valley Bank aside, the fact that you've created this new lending facility for all banks to take advantage of and created magical accounting tricks they're allowed to use to basically, you know, avoid recognizing that their assets on their

balance sheet have lost billions of dollars in value. That is a bailout. That's a bailout of banks that may have had trouble and bank managers who may have had trouble and the shareholders of those banks, huge, tremendous value provided to them. So don't gaslight us that it wasn't a bailout. Don't gaslight us that inherently what you have done is backstop all deposits over $250,000. Everybody who has less than $250,000, which by the way, the mean bank account in America has $5,300 in it, 5,300. So this is like clearly definitionally, you are just helping people who have more than $250K in the bank, which is a very exclusive and privileged club. Yes. You know, it's just the mean bank account may be $5,000, but the mean bank account of those

people who matter is going to be like $500,000. So those are the ones who the actual banking system works for. You can't make it up, but there it is. Indeed. Great exchange from Jon Stewart. Very concerning update coming out of East Palestine. Let's go ahead and put this up on the screen. This is from our friend Rich McHugh, a fantastic investigative journalist who's now with News Nation. They say new independent tests detected carcinogens in the water in East Palestine, Ohio. That's, of course, the site of that toxic train derailment back in February. Rich McHugh spoke with Big Pine Consultants Justin Johnson about the concerning results. Let's go ahead and take a listen to a little bit of that. And I spoke with one environmental scientist earlier today, shared his results with me, and the results are not pretty.

On the ground today in East Palestine, we found carcinogens in the water. We found carcinogens that Ohio EPA is not finding. Shocking findings from an independent environmental group. Is it safe to find these levels of carcinogens in the water? There is no level of carcinogen that is safe. So remember Sagar, why this is so significant is because most of the results that have been offered as proof to residents that, hey, the air is good, the water is good, the soil is good, it's all good, you can come home, there's no problems,

has actually been conducted by consultants hired by Norfolk Southern, the very railway that has the greatest possible interest in covering this whole thing up. So when you actually had independent experts come in and do their own tests, they're like, hey guys, this is not safe. There is no level of carcinogens in the water for people that is safe. And it's also really troubling because this isn't the sort of thing that's going to show up as a problem right now. It's going to be 10 years down the road when you start having a cancer cluster in this area, when all the cameras and all the focus and all the attention and even the memory of this has all disappeared. That's when this is going to be a crisis. Where's the EPA? Where's the federal government? They're too busy with Silicon Valley

Bank or with Ukraine. And that's the major meta takeaway from all of this. Why are private groups even the ones who are doing any of this? We should be getting consistent reporting from the EPA, from the feds that is checking what Norfolk Southern is doing as well. And of course, this is the greatest thing that could ever happen to them. They want the story to fade. They want to pay as minimal as possible, if anything at all. Who knows right now where the Railway Safety Act is going to go inside of Congress. So everything is currently going very much to their benefit. The only people whose benefit is not are the people who actually live in East Palestine, Ohio. Yeah, that's exactly right.

Now, I mean, from the stories we've been covering lately, you really see who the federal government moves heaven and earth for and who. I mean, Joe Biden still hasn't visited, even though he said he would, which is disgusting and disgraceful and in and of itself, but more importantly, the lack of basic answers and any type of attempt to make these people whole, it's truly, truly unforgivable and not something we are ever going to forget. Pink Floyd's Roger Waters actually just had a concert canceled in Germany because of his views with regards to Israel. Friend of the show, Katie Halper, who's host of the Katie Halper Show and co-host of the Useful Idiots podcast, has been shining a light on exactly what is going on here. And she joins us now. Great to see you, Katie. Good to see you, Katie.

Thanks. Thanks so much for having me. Yeah, of course. So you wrote a piece on this. Let's go ahead and put it up on the screen for Counterpunch, along with Vijay Prashad. You said Frankfurt undermines human rights by canceling a concert by Roger Waters. Can you explain their thinking here and the reality of what Roger Waters' position on Israel is? Sure. So first of all, I just do want to plug the fact that we have, based on this story, a very important petition that's calling on Germany to uncancel the concert that they canceled. And people have signed that, including Susan Sarandon and Cornel West. Tom Morello just signed, Noam Chomsky, Glenn Greenwald, Gabor Mate, Chris Hedges, Peter Gabriel. And the reason that so many people, literally thousands, have signed this, including artists

and intellectuals and musicians and filmmakers, is because this is an issue of human rights. It's an issue of artistic freedom. It's an issue of free speech. And what this is showing us is once again, a very dangerous conflation between criticism of Israel and anti-Semitism and the suggestion that anyone who criticizes Israel or defends the human rights of Palestinians is an anti-Semite. And this, of course, isn't true. I mean, one of the ironies is that right now, as we speak, thousands of Israelis are pouring into the streets, protesting the Israeli government's legal overhaul and also violent treatment

of Palestinians. But this is a really dangerous conflation we see more and more. And the irony is that it's in itself is anti-Semitic because it perpetuates this anti-Semitic stereotype that all Jews blindly support Israel, that we're all a monolith and that we have this dual loyalty basically, and that all we do is support Israel. Now of course Jews are not a monolith and many Jews are critical of Israel and some of the loudest critics of Israel are Jewish. So this is again just an example of this dangerous conflation and a dangerous equation of criticism of Israel and anti-Semitism.

And basically what they're saying is that Roger Waters, the German government, has actually called him one of the best-known anti-Semites. And their only proof of this is the fact that he supports BDS, boycott, Divest sanctions, and that he's compared Israel to South Africa. And of course, guess who else has compared Israel to South Africa? The UN, countless human rights organizations, which have said that Israel is an apartheid state. And we're talking about extremely mainstream human rights organizations. I mean, this is something Palestinians have been saying for decades, but it's so undeniable that you have Human Rights Watch, Amnesty International, you have Israel's own Beth Salem, all agreeing that there is an apartheid government in Israel. And what people want is they want to scare people away from criticizing Israel. They want to

delegitimize very legitimate criticism of Israel by smearing it as anti-Semitism. And this is just one of the latest examples of this. Another irony, by the way, is that Roger Waters' own father literally gave his life fighting Nazis. He was killed in World War II. It's actually kind of fascinating. He was a pacifist. So you have Germans telling Roger Waters, the son of someone who was killed in the fight against Nazism, that he's an anti-Semite. And I think Germany needs to deal with its own legacy of anti-Semitism instead of basically taking it out on Palestinians, which is what they're doing. So Katie, what was the specific reason

that the Germans cited? And was it the German government or was it the venue? It was the government. That's what makes it especially scary. Yeah, so it was the Frankfurt City Council and the Hessian state government. And their reason was that they want to set a clear signal against anti-Semitism. And they described Waters as one of the most widely spread anti-Semites in the world. And again,

their only evidence was that he had critiqued, called for boycott, divest, sanction, which is this nonviolent BDS movement that calls for a boycott and divestment and a sanctioning of Israel, and also has called out the existence of apartheid. And, you know, it's such a bad look. Also, this idea that you can't criticize Israel because you're an anti-Semite. I think people are seeing through it more and more. And you know, another interesting example is that you have not just Roger Waters, but you actually have Jews who are being targeted by this. There's another artist in Germany named Adam Bloomberg, who's a photographer. Many of his family members were literally wiped out during the Holocaust. He's had a show canceled. What's his crime? His crime is criticizing Israel and defending the human rights of Palestinians. And now he's had a show canceled. It's the gall,

the chutzpah, as we say, but the gall of Germans telling a Jew that he's an anti-Semite. I don't know where they get this entitlement from. And this is a particularly awkward time, one might say, to be leveling this criticism because criticism of Israel right now and the reforms, quote unquote, that Bibi is trying to make has been quite widespread. David Friedman, who was Trump's ambassador to Israel, actually criticized Netanyahu over these reforms. You know, and even on the point of BDS specifically, you had 250 U.S. business leaders and politicians warn in an open letter that, quote, many leaders in the business community will feel compelled to reevaluate their reliance on Israel as a strategic destination for investment, sourcing talent, building engineering centers and maintaining intellectual property if this push and this direction of the government continues. So they're not calling it BDS, but what they are implicitly saying here is, hey, we might pull our businesses out if you continue in this direction. So even the direct criticism of BDS is being undermined by the fact

that people now are seeing these outrageous actions and across partisan lines, there has been a lot of criticism of this government. Yeah, I mean, again, it's just it's really embarrassing. And you have something very dangerous called the IHRA working definition of anti-Semitism, which once again includes calling racist, calling Israel racist, supporting BDS. They include this as a definition of anti-Semitism. And it's really disgusting because we do have real anti-Semitism in this world. And this just really disgusting because we do have real antisemitism in this world. And this just cheapens the discussion of antisemitism when things that obviously are not antisemitism

are called antisemitism. And I just want to quote something that Roger Waters said when I was talking to him when putting together this petition, which everyone can sign at change.org. You guys hopefully will put a link into it. And- Yep, we'll do that. Okay, great. And you can also find it. It's at the top of katiehelper.org. You guys hopefully will put a link into it. Yep, we'll do that.

Okay, great. And you can also find it at the top of katiehelper.com. It's right there. Sorry, that sounds self-promoting. I just realized right before I went on the show that I didn't have it. But he said, my platform is simple. It is implementation of the 1948

Universal Declaration of Human Rights for all our brothers and sisters between the Jordan River and the sea, which is, and he sea, which is owed. And he says, anti-Semitism is odious and racist, and I condemn it along with all forms of racism unreservedly. And actually, what's very important to know is that he, Roger Waters, just served a lawyer's letter that is demanding or attraction from Frankfurt's council.

Because as he says, as Roger says, my brothers and sisters, the Palestinians, have a basic human right not to be oppressed, and I have a basic human right to support them in the city. Frankfurt has no right to cancel my show. Yeah, very true. We'll make sure to put the link to the petition in the description. Obviously, this is an issue much bigger than Roger Waters.

I mean, you yourself have suffered consequences for your outspoken support of Palestinian human rights. We've had a number of other guests on here as well who have suffered political and professional consequences, too. So this is an incredibly important issue. Thank you. Katie, thank you. Thank you so much. And we, of course, want to be talking about what's happening in Palestinians and not these stories. But because of things like this, we have to talk about this. And we have to remember that the people who are like paying

with their lives right now are Palestinians. And Israel should be criticized and needs to stop doing what it's doing because it's unacceptable. And it's a shanda. It's a shanda. And that's why Jewish Voice for Peace and lots of other Jewish organizations are so critical of Israel. So well said. Katie Halper, great to see you. Thank you so much. So there's a story that's been breaking out of Tennessee involving the Republican lieutenant governor that, to be honest with you, I don't know that we would normally cover except this is so hilarious and bizarre and i honestly don't even know what to make of it at this point that we cannot resist bringing you the details okay so lieutenant governor of tennessee his name is randy mcnally randy and randy that is relevant he was caught um i mean it's not even caught he was publicly doing this

there's a young man who many have described as a twink who likes to post lots of like racy pictures of himself as, you know, thirst traps as people do on Instagram. And the lieutenant governor, this like nearly 80 year old man, posted all kinds of supportive comments. There was one that was like the picture of the dude's ass up close in underwear. And he posted a bunch of heart and fire emojis. And then he said, Finn, you can always turn every day into sunshine and rainbows or something like that. So it was all these like weird, like old men type comments on this young 20 year old dudes, gay dudes, thirst traps. OK, so Randy McNally sat for an interview to explain himself and just what the hell he was doing. I mean, he's an anti-gay politician and there's all kinds of

like anti-trans in particular legislation coming out of legislature in Tennessee. So many are saying the Slip Year is very hypocritical. Here's how he defended himself. Were you trying to help this young man in some sort of way? Just basically trying to encourage him. There was also this post where the man said he was, quote, not a whore, but a hoe. One is a slut. The other is a prostitute, adding, I'm the one that gets free weed for giving than a reference to a sexual act. And it was liked by Lieutenant Governor McNally. I don't know that, you know, a lot of times on people's posts, you see the name

and you see what they've written and you just press the button that says like. So you didn't read that post? I don't recall reading the part about the weed. I know that. What about the prostitute? I. I know that. What about the prostitute? I might have read that. I don't remember.

I don't recall. Yeah, you certainly weren't reading, were you, Lieutenant Governor? I might have read that part about the prostitute. The hilarious thing, okay, so his whole defense is like, I engage in social media all the time. I try to help people with my post. And I guess he's made similar comments on other like, you know, similarly unclothed photos of young men. And then the other thing he said, which is hilarious, is he's like, no intention of stopping.

OK, good for you. It's just so funny, too, because he's like, oh, maybe if he didn't follow him. I just checked my whatever for you page on Instagram. It's a bunch of watches, a bunch of videos of cats getting screwed with their getting screwed with their owners and then videos of weightlifters eating steaks. That's what I got in terms of mine. So that's a pretty good example. I guess the content or whatever. It's only getting suggested into your feed, sir. Sir, if that's exactly the type of content that you're looking for.

So apparently— Let's all be real honest. Now people have interviewed this young man who he calls Finn Franklin McClure, I think is his name. Yeah, what does he say? He's like—they met, I guess, on Facebook originally. Get out of here. And he just felt the posts were, like, very nice and supportive. He claims that they've never met in person person which is the same thing that he says so that's um that's what i know

look guys 2023 you could just be gay nobody cares it's fine also well i mean but that's not really true in terms of like the republican party context in tennessee so don't know. It's just his defense or lack thereof is what really has thrown me for a loop here. Is he married? Yeah. I think he's a great grandfather, they said. Yeah. I want to see what the wife has to say about that. Yeah. Yeah. Anyway, guys, that's what's going on. Funny story. Well, we continue to cover the rapid developments in generative AI, and we want to bring you one of those with integration into Snapchat. Tristan Harris and Aza Raskin of the Center for Humane Technology, you may remember Tristan from The Social Dilemma on Netflix,

were raising awareness about this in a post, in an experiment actually, that they ran on Snapchat, which integrated AI into the platform just last week. Tristan tweeted, The AI race is totally out of control. Here's what Snap's AI told Aza when he signed up as a 13-year-old girl, how to lie to her parents about a trip with a 31-year-old man, how to make losing her virginity on her 13th birthday special with candles and music. And Tristan finishes off by saying, Parents have children on Snapchat who didn't realize this feature was rolled out last week and was accessible pretty easily. A lot of people probably had no idea.

The other one, we can put this next element up on the board just to get this segment all queued up. This is a Wired article called How to Start an AI Panic about sessions the Center for Humane Technology has been running around the country. This one's talking about one in New York. They were at the Pali Center in Los Angeles as well. They were here in D.C. talking to people who are in positions of power. And they've got the ears of some pretty powerful people, I would say. Basically raising attention or trying desperately to begging people in positions of power to take the rapid advancements in AI seriously, to say we might need a pause on the open source use of AI

because it's training it and it is developing so quickly that it is going to outpace our ability to regulate, our ability to just simply have awareness like parents in the case of Snapchat. Your parent, Ryan, that would terrify me. It's pretty crazy. Nuts. That's pretty insane. And it goes hand in hand with news that came out of Verge where their headline was Microsoft lays off team

that taught employees how to make AI tools responsibly. So as part of these layoffs that have been rocking the tech industry, we know for sure that Microsoft's team got whacked. But you're also probably going to have, you're probably going to see the same thing in a bunch of other companies as well. Because when you're going to do layoffs, the first thing that goes are the things that are nice to have.

Like, oh, it'd be nice if we could do AI ethically and responsibly, but that's not really helping our bottom line. And in fact, it might be getting in the way of our bottom line because we keep talking to these people about rolling this out and they keep flagging all of these different ethical problems they have. Like, oh, whoops, it accidentally taught a 13-year-old how to sneak out with a 31-year-old. And so instead of holding it up for that, let's get rid of this team and then let's just roll it out. So in that sense, to the bottom line, it's a win-win. And so the idea that Silicon Valley or the tech industry was ever going to self-police any of this, I think, is a fantasy. And this should be a wake-up call that if we as a people actually

care about this, actually care about this staying under the control of people, then the government is going to have to do something about it. And fast. That's the other thing. I mean, so and then you need these tech companies to cooperate quickly because they have to be able to see in this race for profits that what they're doing could be bad, not just for the country, but for their own families, for themselves. And there are a lot of people that are absolutely trying to raise the red flags who are working in AI right now. There are some of them that say, listen, we're looking at this and it absolutely terrifies us. There's almost nothing that we can do. We need this to be in the public square. If you thought we were behind the curve when it came

to regulating Facebook and Twitter, just wait. I mean, this is going so much faster. And again, there seems to be basically very little coverage of this in the media, very little talk about it in Washington, D.C. Props to the Center for Humane Tech for doing what they're doing. But we need so much more. We need more than just one organization raising the red flags about this so that you can have a tech industry that's willing to pause because they know pressure is coming. And one way you could bring pressure to would be through defamation law. If they don't have section two, like, do they have section 230 protections? I think so right now. Right. But so, and, but it's not a commenter that's making the, the comment it's

their own, their own what machine. Their IP is publishing it. Yeah. Is producing content. And if that content is defamatory or that content puts people at risk, you know, they start with a disclaimer that says, this is crazy. Don't put any faith in any of this. If a court would rule it, that disclaimer doesn't count. Like you're actually responsible for what you produce and for its consequences. Then you would see them, I think, take more responsibility for what they're producing. And look at this in Snapchat's case. This is a child. This is a 13-year-old. An adult is, I mean, we're going to have enough problems as adults adapting to this, but with a developing brain, learning to have intimate relationships

with artificial intelligence is a Rubicon that has not yet been crossed. And it is happening right now on a daily, weekly basis in ways we don't understand. We don't have research. We don't have the ability to understand what this means on a mass scale. Being ruled out so quickly is grossly irresponsible of Snapchat to put this in their product. It should be something that shames Snapchat out of doing anything like this. They should be getting grilled right now. This should be in front of Congress. People should be talking about this in the media. And there's just crickets, just crickets, but it's utterly shameful. Yeah. Bad stuff. Really bad stuff. Really, really bad stuff. Take it seriously. Take it seriously in your own life.

And we need to take it more seriously in politics and media. One of the most vocal cheerleaders of the Silicon Valley bank bailout was none other than California governor Gavin Newsom. Ken Klippenstein from the intercept joins us to talk about some of his new reporting about some potential conflicts that governor Newsom may have had that he, that he neglected to mention. Ken, thanks for joining us. Good to be with you guys. I have to say, when you queued up this segment, I thought you were going to say one of the most vocal cheerleaders of SVP was Ken Klippenstein.

Yeah, that's me. Who happened to have some of his startup capital lodged in that bank? Ken, a lot of people don't know this, has a winery like Gavin Newsom, and he was banking with SVB. Well, congratulations. I'm glad that everything worked out for you. You know me, I like to support the innovators. That's right. Yes. So, Gavin Newsom loves to support the innovators as well. Tell us a little bit about his entanglements with Silicon Valley Bank, what we know of them. Yeah. So it turns out he has three wineries. He was a businessman before becoming governor, owns a bunch of companies in the hospitality industry.

And three of those wineries appeared in the bank's winery division. That's a thing for the bank. And it's listed on the website. And so it turns out he uses Silicon Valley Bank for those three companies. In addition to that, a longtime former employee of Newsom's told me that he also uses it for his personal – he has multiple personal accounts with the bank as well. And then a third angle to all of this is that his wife runs a nonprofit and on the board of directors is a president of Silicon Valley Bank. And that nonprofit received $100,000 from SVB over the last several years. So a number of different points of connection and ties between Governor Newsom and that bank.

And I want to get your thoughts, Ken, on the response from Newsom's camp to your reporting. They claim, right, that he has his holdings, all of his financial holdings are in a blind trust. What do we know about the potential conflicts there and how much that would matter if, for instance, you know, his wife has this connection on the board with SVB? Right. So the problem with this blind trust is that it's not meaningfully blind if you look at what some of the ethics experts have said. And what this case is really reminiscent of was President Trump and his attempt to put his companies into a blind trust, which he then allowed his son to run. And then in this case, sort of in parallel to that, Governor Newsom's sister runs his blind trust. And so the critique

of that is that it's not meaningfully blind because A, he already knows all the companies that's in it because he's run them for a number of years. And B, you know, it's his blood relative that's running this thing. So what kind of wall is that to put between him and these firms? It occurred to me, another good one is Joe Manchin, who he and his wife have a coal company, and they put it in a blind trust, but his son runs it. But he still knows it's a coal company.

Right. He knows what it does. Right. And now Newsom might only be able to assume at this point that the winery still has accounts with Silicon Valley Bank, but you don't typically move your major banking operations for no reason unless you're a tech bro trying to spark a panic or you're panicked. I was actually just looking up his wine.

Plump Jack is one of his wineries. Apparently it specializes. It's a boutique like Northern California Cabernet. It's $100 a bottle for their 2018 Plump Jack. You ever had Plump Jack Cabernet? I've not. Never heard of it. Have you ever heard of it?

No. Anyway, so. But you know, I'm not a big Cabernet person. And so did you get any reaction from either the California press or the governor's office in this story? What did you hear? Yeah, the California press is actually following up on it. And I'm glad that it hasn't just become a partisan football because this is really, as I said, with the Trump case, this is an ethics question that is a serious one and has been a serious one in the local press. They had looked at these problems, not specifically the wine companies and the bank, but all of his holdings. And this is something that comes up anytime you have one of

these business moguls that has a high net worth, as Governor Newsom does. There are all these questions of conflicts of interest. And so there's been some very good reporting in the local press around what's called behested giving. So there are strict limits on what California politicians can take in terms of gifts generally, but there's one exception and that is what's called behested giving, where the politician directs giving to something. In this case, Newsom is known to have directed giving to his wife's nonprofit, and so it's not regulated in the same fashion that other gifts are.

And that's something that the local press has been focusing on for a number of years now. And Ken, you just said something important, which is that you didn't want it to become sort of a partisan football. The report you had just before this one was about entanglements in the office of Kevin McCarthy with Silicon Valley Bank. Tell us about what you found there. Yeah, what was interesting about that is that two of the House Speaker McCarthy's

senior staffers for a number of years ended up becoming registered lobbyists for Silicon Valley Bank. And not just that, when I looked at what specifically they lobbied on, it's directly related to all the stuff that's happening now, which is the 2018 Dodd-Frank partial rollback specifically pushed on that, lobbied the FDIC, which is what's insuring the depositors at this point and guaranteeing making whole the people that had money in that bank. So it's directly connected to all this. And what's sort of funny about that is when I have this Newsom piece come on, some Democrats are very angry about it, saying, you know, oh, you're a Republican in disguise. It's like, oh, that's funny. You missed my last story.

It's literally about the other. I'm not looking for any specific. I'm just looking at the bank and trying to see where the nexus is with politicians and whatever pops up is what I'm going to write about. So I don't know what I don't want to tell people. Yeah. And it's really in that rule writing and in the regulatory side where the public is at the most disadvantage. So in Congress, at least it's it's happening somewhat in public view. So people can weigh in when it's an obscure kind of rollback unless you're reading The Intercept, The American Prospect, you're not going to follow those repeal efforts through Congress. But you can if you want to. By the time it gets into the FDIC, it's really like former McCarthy aides, former Manchin aides, former House Financial Services Committee aides,

who are going directly to the FDIC saying, all right, so here is what was written into law. Now here's how we can weaken it even further. Because the FDIC, aside from insuring deposits, also wrote a lot of the rules around Dodd-Frank about how are we going to implement the law? What does it mean when we're going to stress test you? How often are we going to look at your books? What do we feel like is a reasonable amount of exposure? What is not a reasonable amount of exposure? Because what I think a lot of people might not understand is the direct link between the 2018 rollback and this blow up. The link would be if there were tighter inspections and stress tests of the bank, you might have had regulators come in and say, all of these bond

holdings, mortgage-backed securities, I've been hearing a lot on the news about potential coming interest rate hikes. I'm not sure that if that stressor hits you, that you're going to be able to survive that. So one of two things happens. They make them unwind those, or knowing that they're going to get that pressure from regulators, the risk managers don't do it. They say, you know what, we need shorter-term bonds here, or we just need to stay in treasuries, or we need to make sure we're tightly hedged in the case of some type of shock from interest rates. And this idea that nobody could see these interest rates coming. Are you kidding me? I'm not a risk manager at a bank. I knew they were going to raise interest rates. I talked to an employee of SBB Bank who himself was frustrated about exactly what you're saying, which is that, of course, they were going to raise. They were saying it. And so what's amazing,

I interviewed an economist recently about all this and said, why are these banks so adamant about rolling back regulations? Because doesn't that end up hurting them in the mid to long term? And he's like, well, you're assuming that they're looking at the mid to long term, you know? Because again, talking to this employee, he would have been happy to have the stress test happen because he wouldn't have to worry about all this stuff now that he's having to brief investors and things on and, you know, hope for his job to still exist in a year. And so it's kind of interesting how much it ends up hurting basically everyone except

people at the very top C-suite of all these kind of deregulations. Well, and you quote at the very end, you really stick the landing in this piece again. You say perhaps no one embodied this contradiction more than Larry Summers, who said, this is not the time for moral hazard lectures or for lessons administering or for alarm about the political consequences of bailouts from a tweet on Sunday. And when you have, to your point about the people in the C-suites never ending up getting hurt, well, maybe that's partially why. Yeah. Coming from the guy that for the last two years has been endlessly talking about how we can't have student loan debt because the moral hazard.

And now, whoa, whoa, whoa, we don't have to worry about moral hazard. This is a very serious issue right now. All those people drowning. And that we need more unemployed people. That's the other thing. He said we need 5% unemployment for 10 years. What happened to that? Well, here's your chance, right?

Not like that. The wrong people would be unemployed. We don't want them to be unemployed. Come on now. That's a little bit, those guys? No, I know them. Yeah, they're my friends. They need this. They're good people. They have wineries. That's how you know somebody has lost an argument, when they just say, now is not the time. Yeah, now is not the time. A memoir by Ted Klipp. You might be right. I just don't want to hear it right now. Ted, great reporting.

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