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Breakingpoints dot Com. Good morning, everybody, Happy Monday. We have an amazing show of 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're going to go deep on what exactly is going on in our financial system, the government's reaction for 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 to Norfolk Southern an effort by a couple of senators by Parson 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 cringed 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 super Cast 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 appreciated. I know that we have a big audience there on Spotify. So now for people who are driving or whatever, I'm not saying you should do this while you're driving, but maybe 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. Here you go, We've got the video there. I think you guys will enjoy it. You can speed it up, listen to us at three point five 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 Supercasts, so thank you guys so much, and thank
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to be able to offer that to you all. That's right, and for all the new improvements coming to the show, it's going to even look even better than on the Spotify screen. Indeed, 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 Viley 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 without access to all of their
money starting on Monday, March thirteenth. 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 completely 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 ensured deposits up to two hundred and fifty thousand dollars, invoke something
called the systemic risk exception. The systemic risk exception allows the FDIC to protect the deposits of all depositors even over that of two hundred and fifty thousand, of which some at least ninety percent 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 fifty percent of the bank accounts, or 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 four hundred and fifty seven million dollars in the account, which, let me just say pause on that one. That is absolutely morocle. Oh it's nuts. That is, 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 two hundred and fifty thousand dollars.
So they placed a half a billion dollar bet effectively on the idea that the government would come in and bail them out, would say ultimately worth out. 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. Is insane. Oh, it's also crazy. And I look, I'm not saying I don't feel for people who have their deposits in the bay, especially if you've got tech startup and you 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 got to take a step above
and look at the total financial system. Per David Sirota, we have nine trillion dollars in deposits and 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 butt. Then the banks the so 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 ensure you up to two hundred and fifty thousand dollars. 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. Yeah, then I think that's an incredibly key point. Whatever you think about this bailout, and don't let anyone gaslight it into thinking that this is not a bailout, and not just of SVB, and not just of 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 defacto indicates to every bank in the entire country that even though they've only been paying into the fdi C to ensure two hundred and fifty thousand dollars deposits, de facto they actually have insurance on one hundred percent 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 ensure the entirety of the deposits. Who do you think is on the hook for that? That's number one. Number Two, in some way 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 show you in a moment how they were sort of an outlier in terms of in terms of this particular use of their assets.
That 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. Okay, 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 purchase 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 US government, which is backed by the US 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 one hundred percent of deposits now apparently ensured 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 cryptobank that just went. This is not a large bank. Well, that's what really starts the questioning. Enough,
any bank that fails is out bailed out. 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, Sager, that reflects the fact that ultimately the US 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 bail out or not, and these depositors or 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 ultimate. So let's go even to this 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 US taxpayers not just uninsured deposits that need to be guaranteed, but for trillions more throughout the banks in the country. Quote. I think we will right now focused on addressing the current issue and stabilizing the banking system, assuring uninsured depositors that they will be made. But I do think we'll be looking back and reassess
and assess their whether any change 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 one hundred and twenty six 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, that one hundred and twenty six billion, they have to get up to nine trillion to eventually ensure all of this. You ever heard of a bank that's going to voluntarily pay more money. Who's do you think is going to be paying those fees? It's customers. We're the ones who's you know already bank account 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, that'll be like nine hundred dollars, some outrageou stuff. They will never pay it voluntarily. There's no possible way that you could ever
in fact, that 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. It would have been wiped down,
everything above two hundred and fifty thousand dollars. But there is in fact a process in place that is supposed to be followed in such a situation, which is okay, first two hundred fifty thousand dollars ensured, no problem, everybody's clear on that, and then the rest of the deos our backstop by the assets of the bank, 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 ten percent haircut, you still would have likely had people getting somewhere around ninety percent 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 a catastrophe across the system, and so we have to act now to make sure they get one hundred percent of their money right away on Monday,
to forestall that possibility. I think that's possible, But I also think that regulators were released 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 door process to play out and force them to levy this absurdity that these were both systemically important banks and again effectively codify within the you know, within our
country that literally every single bank is now considered systemically important ie too big defense. 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 his 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 twenty twenty one. Then throughout twenty twenty two, 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 today had to sell many of those treasuries at a loss in order to cover many of the deposits there were getting done. All of this cascades to the point where it's a very shaky procedure. Then they have an announce 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 twenty four hour period, almost forty two billion dollars were withdrawn from the bank. That enough was just able 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. Friend Kevin Russ actually did a 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 Bank spread so quickly. It's part of the reason why you had that forty two billion dollars 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, with Roku being a good example, having some checking account with four hundred and fifty million dollars, 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. 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 some cases were signing them into exclusive lock ups 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. There was it's basically like a vertically integrated
tech bank, which again disproportionately exposes it. And you know, whenever you look at their balance sheet. Let's go to a four 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 US Bank to loan, the US 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 one hundred percent mark, right in the higher risk deposit base zone for nearly one hundred and ten percent 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 values. So there's a lot, a lot going on, Yeah, 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 seventeen percent more in treasuries than any other bank in the United States. So already. Basically you just have bad executives that are at the top. You know. 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 is like, are these people going to making 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 they're going to be okay, I think is the bottom line here, Even though they're the party line from the government is that they quote unquote wiped down.
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, stage 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 zo point five percent, so that's a very significant raise. Well, now you're going in the opposite direction, injecting funds into the economy and you know, rescuing these particular workers who involved with these particular bank 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 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
in 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 Mansions 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 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've 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 US policymakers to just start or influential economic thinkers start calling for Baila, let's put this up there on the screen. This was less than an hour after SVB failure. Larry Sommers calls for all depositors at Silicon Valley Bank to get bailed out one hundred percent. It's just it's like
you can't even make it up. Immediately after, let's go and put this up there, he said, this now is not the time for about moral hazard, right, Okay, which is our 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 Hazzard 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 depositor 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're 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 Mawi works in climate He says, with the implosion of SBB, the planet could literally be at stake. Fifteen hundred 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 called on the Fed to actually step in and buy the bank debt to 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 deludedive 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, it's 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 has an impacted the jobs number of the economy literally at all. Like if you think about like the Google layoffs in totality, they don't even equal like a factory in Alabama if
one of those were to go out of business. So tech is one of those like 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 work that had a similar risk profile. But you know, 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 silver Gate,
which is a small crypto focus 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 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 bunds.
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 one hundred percent 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 in solvement insolvent,
and it does not lead to depositors losing all of their cash over two hundred and fifty thousand dollars. They likely would have taken perhaps about a ten percent haircut. So in order to you know, one hundred percent backs up these depositors, they have effectively, 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 what one hundred percent fail?
That is alarmist and it is just false. In addition, there are few people, a few banking clienteles in the world that would be as well positioned to withstand having a cash crunch for a show time period than these individuals, many of them who were backed by wealthy venture capitalists, who were some of the same voices who were demanding the bail out over the weekend, Well, if they felt these companies were so promising, so important, etc. I didn't
see them marshaling 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 let's go to the really good part here, which I really enjoy, which is on top of all of 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
hole by the Treasury Department. Well, this is a perfect example of a bank where you had a cozy relationship with regulators and with former Congressman, one of them being throw this up there, mister 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 one million dollars to sit on the bank. And then when you consider also what this bank was
doing and how exactly facilitated this loss is crystal. Let's go ahead and put this up there. Signature Bank being closed by New York state authorities and also invoking the systemic risk except and is having the FEDS come in and backstop them, largely because large 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 deposits, 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 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 FEDS step in and basically make all of their depositors whole. And this is
total malfeasance on the behalf of the signal. 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 holy and totally exposed, unable to fulfill your deposits, and then, because you know what's the old what's like, you privatize the gain, socialize the risks. Now the FDI see is the one who's
paying all these people's deposits. 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. 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 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 helped you auther 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 big 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 on this one, absolutely not. And so even a 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 guys
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 US government has said we are backstopping one hundred percent 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 or our entire banking system. And the direction like this direction as exists right now is completely insane. That the public is on the hook for literally everything, and then the gains are all concentrated in the handful of a few wealthy executives in shaffold profits and of bonuses. That's where all of this is going to lie. Why don't we go and tell the people about the bonuses. Yeah, so let's take a look at
this gun. 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, 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 submit this may interest you.
Before the collapse, executives sold shares. Gregory Becker, the CEO, sold eleven percent of his shares on February twenty seventh. Michael Zucker, who was their general count, sold nineteen percent, Daniel Beck the CFO, thirty two percent, Michelle Draper the CMO twenty five percent. So when you hear people saying, well they got the executive's management got completely wiped down, Well, they took their gains and lock 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, oh wow, this was for work that they did in twenty twenty two, 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 Serota 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 a 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 sixty or seventeen Democrats, twelve sixty, 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 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 two thousand
and eight 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 the 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 stifer 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 fifty Republicans and seventeen 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 Francis. 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 two thousand and nine, just a recap of everything that happened in two thousand and eight. And it's like in all rhymes, it's all
the same, Like, 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, and many people's view they were saving themselves and saving
their bonuses and four to one gays. But here's the thing, Like, 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 one hundred and forty thousand dollars in bonuses per employee, some twenty thousand dollars 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 hundred million dollar bonuses on the very last day before he was about to turn himself into the fence 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 twenty twenty two 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 thirty two percent of all your stockholdings in the company, because that's the vast majority of your comp that's harder in cash which was pocketed from investors into your pocket, of which you then are now saying, oh woe is me? Was 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 you know 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 a 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 say if taxpayer dollars do go on the hook. And second, I mean the procarity right now with 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 in 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 into
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 bailounce 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 playing terms. And also he has a great piece, as 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 fifteen years down the road, and we're doing a bailounce once again. So how did that ultimately fail? So let's get to it. Matthew Ziland, thanks for joining us. Good see man, thanks for having me. Good morning. Yeah.
Of course, so we did our best to explain what action the US government is taking, but I would love for you to just explain in the plain as 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 two hundred and fifty thousand dollars, which is the FDIC insurance limit.
There is 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 two and fifty thousand dollars. 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, you know, 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 over 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 of the withdrawals. But obviously the idea here is to make it seem like banks that are solvent today will still be solved 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 US government is guaranteeing the deposits of all nine trillion dollars in banks across the US. What does that mean for the banking system as a whole? What are the perverse incentives? The moral hazard if you wish so this 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 is only only funds itself for insurance these premium claims that banks have to pay the FDIC for deposits up to two hundred fifty thousand dollars. 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, 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. Let's go ahead and put this tweet 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 ensure two hundred and fifty thousand dollars first two hundred and fifty thousand dollars of their deposits. But they actually when the FDICE 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 backstep all of the uninsured deposits across the country. So I know that the government is going in great lengths. Is how the taxpayer's funds aren't on the hook? Like this
is completely funded by Wall Street payments, et cetera. But if we're to facto backstopping the entirety of the banking system and all the deposit is held therein, doesn't it you know, sort of begger 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 one hundred and twenty five billion dollars, and yet they're a huge amount of value has been given over to depositors. You have to remember our 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 two thousand and eight, there was a huge political backlash to bailouts, and the way that was captured in the post two thousand and eight laws and in what regulators want to do is that they never wanted be in a sit 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 two thousand and eight style action, but kind of drawn within the lines of what regulators interpreted made the public angry about, you know, things like TAR and support for AIG and support for things like City Group and stuff where they felt like they're rescuing failed or failing institutions, and the
management wasn't treated harshly enough. Shareholders still survive. 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. The tax payer's not really the taxpayer money on the line because it's raised from the banks, but you know 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. So yeah, it's like this, whether or not it's a bailout, it's kind of a semantic issue, but it's like a huge amount of support. Right,
it's obviously a bailout. Andrew Ross bailout, right, So let's go ahead and put this up there on the screen. You wrote a good piece how two thousand and eight 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 I'm breaking new 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 twenty ten and kind of the rules were written over the next few years, banks of around Silicon Valley Bank size, So these be like large regional banks that are still substantially smaller than JP Morgan's of the world.
These are banks around fifty billion to two hundred fifty billion dollars in assets, and at the time Silicon Valley Bank had forty billion, and now they had last week over two hundred billion. But 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 failed, they had 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 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 legislators really listened to them anyway. So in twenty eighteen, the Trump administration, with a support of a smattering of moderate Democrats, passes this rollback partial rollback of dot frank where it's really aimed at kind of the Silicon Valle 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 could be resolved. So the normal FDIC process turns out to have been completely wrong. Got it. I think that's very well said. Let me add this is an impossible question to answer, but I would love to hear
you news on it. What if they did just follow the normal process for resolving the situation, which is okay, two hundred and fifty thousand dollars ensured backstop by the FDICE. 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. Then back of the envelope calculations I saw was that they'd probably
take like a ten percent haircut. They'd get about ninety percent of their funds, even the ones that were uninshored. 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 that would have really happened, because if everyone was getting fifty percent 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 the 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 Morgan's of the world, and it kind of be this cascade of bank runs. The issue is that, like 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 regulator sorry about that, we're 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 would happened with Washington Mutual when it failed in two thousand and eight. It was
a three hundred billion dollar bank. But they're able to kind of tie it up with JP 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. It does 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, you know, based on the actions that the government just took in this non bailout bail out, we have effectively not only backstop the entirety of you know, posits insured and uninsured across the country, we also have effectively, especially with you know, including Signature Bank, and 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 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 re examine this twenty eighteen dot 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 because they're essentially getting this subsidy from the government, not so much in being kind of this extraordinary action that happened in the weekend, but like 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. It's a 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 in the US government, ultimately one hundred percent on the hook, why are they getting to benefit from all the games. Well, 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 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 too, pleasure 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 bipartison 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 of jd 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 into 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 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 fit said there time for choosing. For most people are not going to know, but it's a very famous actually Ronald Reagan's speech that he gave I believe it was like nineteen sixty four. It was after the Bury I think he 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 are
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 Nolzy's the House Transportation Committee ranking member for or believe, the chairman the Republican side, who said, well, hold on a second, we don't know if we need more regulation here, 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 at 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 jd
Vance's initial comments. Took a while to comma on these. Palace Astini went on Tucker and he was more fixated on like, oh, this is about wokesm etc. 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, Okay, what is this new world that we live in, what
does it look like? And 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 you know whoever his staff signed on that. You had the Democratic members from Pennsylvania, the Bob Casey sign on that shared Brown. I mean, these are serious people who are interested in it. The President Biden endorsing the legislative you don't see that all that often. Yeah, and especially once spearheaded. The real question
again is going to be those Republican lawmakers. But then the secondary question is are these actual CEOs, these executives of people responsible to this? Are they going to pay and are they actually going to get held responsible here? Because who By the way, it's been what more than a month now almost into derailment. What is going on? I mean, do we know what the toxic levels are and water? Are people dead or not? I mean, can we can we trace like poisoning of these pets now officially?
Like you know, just think about what look 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 little save
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 phased like, oh maybe we should test for dioxids, 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 it's absolute insand 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 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 ten billion dollars in stock
buybacks recently. Can you tell the American people and your employees right now that are in order to improve morale in your workforce, that you will guarantee at least seven paid six days to the fifteen thousand workers you employed, Senator, With our latest agreement with our employees, which included a historic twenty four percent wage increase and access to premium healthcare benefits, we immediately pivoted to talking to each of our local I want, I've been deeply involved. I introduced
the mens then 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. But all do respect. You sound like a politician. He is the sure the will not say that he will increase paid sickly. This, of course was the central issue in terms of a real 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 comment to it. 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 as signed on right now. President Biden endorsing the bill frankly problems makes it more difficult because now there's oh, we're sending 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 is 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, oh, because the Fed is raising rates and their companies can't afford to employ them. That's the next 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 sending
quote sounds like a politician. I I mean, look if the guy the fact that Guy Stone even has his job is crazy in this environment. Yeah, so, I don't know, I feel just discussed 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. Okay, 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 they're explicit policy is we want to kill jobs here. But the minute there were concerns about job loss in Silicon 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 resources for, who they can leap into quick and agile action for, and who is facing a month down the road can't even get a straight answer about test can't get health real health care, and you have no bail out 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. At the same yeah, at the same time, we wanted to cover these some interesting comments from former Vice President Mike Pence. Of course, famously, on January sixth, you had people who were in the Capitol who were channing Mike Pence.
He was a focus of a lot of ire because theoretically, the idea that took hold the maggot bas is that he could individually stop the electoral count and he can 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 sixth, 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 and put this up on the screen. Here's the media headline, and says angry Mike Pence blast Tucker Carlson's January sixth 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 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 sixth. Quote, tauris don't injure one hundred and forty police officers by sightseeing tourus, 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 capital on January sixth. 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 to 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 Millie 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 consistently has some seven percent or so of the Republican electorate backhand. But we've already gone through a cycle where GOP primary voters by and large backstop the steal candidates and those who have the Tucker view of January sixth than those who have the Mike
Pence view. So you're intentionally putting yourself on the side where you have the most competition the vig rodmswami's 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 case is kind of already even you've allowed the cake to be baked on the Republican side about their the Bass view of January sixth, the Bass view of stop the Deal, the basis 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 Minch 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 like collective action to move on from this guy, and so you end up with week 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 Republican primary. Not that I thought he was going to be successful in the Republican primary anyway. So it's sort of without consequence in
that regard. Yeah, it's just like what are what are exactly are we doing here? Are we running for president? Or are we moralizing? Because 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 name. He still can't even say his name. He still doesn't say his name. Yeah, he just says he will be held account. What does that even mean? Say it? Make
the case I stood buy him for four years. He betrayed me, He's a coward, say something like that. That's actually a strong point. And who's going to hold him antible? Because it's sure as hell doesn't feel like it's going to be You feel like history, what is it? Like? What what does that mean? It doesn't really mean anything. And so it's it's a very squishy, belated, half hearted
attempt to draw some blood here. And you know, and then when you look at like the issue set that Mike Pence has staked down in opposition to Trump, would like, oh, Trump is going to protect so security and I want to privatize it. Okay, you know Trump won't do a national abortion band, but I will. All right, good luck, Okay, It's like, well, you're actually making a pretty good case for Trump. So all right, Crystal, what are taking to 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. So I don't have any specific information about any Florida bank similar to Silicon Valley Bank,
and hopefully that remains the case. You know, Maria just appears to me, I mean, 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 Junior tweeted quote 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 Posts 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 could 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 balance and the subsequent actual balance. 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 interrastraight sensitive treasuries.
Their blog posts did not create the Silicon Valley herd mentality which sparked a bank run. The presence or lack of wocism is an irrelevant sideshow here, but plenty will fall hook line and sinker for this laughable distraction because for some entirely too online people, led by a cadre of right wing media and political elites, opposition of wokeism has become an all consuming, all encompassing worldview, blotting out
any other potential political understanding. Anti woke brand lead to at least as goofy and authoritarian and approach to politics as woke brainworms do. Anti Wochism is goofy, and 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 Wochism 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 wocism. I have called out cancelations 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 and elite circles as a panacea for working class Americans. I've opposed the oppression Olympics type of politics that has human beings vuying for victimhood points based on immutable personal characteristics.
And I have to cried these sixteen to nineteen Robin Dangelo grifter types who push an ideology that is so woke it's actually racist, arguing things like math is white supremacist, and selling then or 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 Vivic Ramaswami. He has launched his bid based on his claim to being the CEO of anti woke Now. The fundamental un seriousness of the ideology is demonstrated by the mess that is Vivik's platform. When Sovereign Marshall interviewed him about his key policy priorities, he didn't
focus on jobs, healthcare, corruption. Instead, he named checked ending, affirmative action in federal government hiring, and a vague program a building national identity. Now, however you feel about it, firmative 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 Rond de Santis.
He too is hoping to use anti wokeness to launch him into the presidency. According to Pan America, thousands of books were banned across thirty two states this school year, and Florida, led by Rondo Stantis, led the way now to Santis 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 wocism
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 wocust cries of racist and anti wocist cries of groomor it would shift consciousness from individual villains to systems that we can work together to perform and change. And it would certainly not counter a woke
cult with a new anti woke cult. But wocism and anti wochism are what I would call anti politics because they keep their adherents 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, de 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 one 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 green 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 divisive 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 of hijacked our democracy. That is the real way to fight the so called woke mind virus. Sager, I thought I was going to lose my mind what I say, and if you want to hear my reaction to Crystal's Monologue become a premium subscriber today at breakingpoints dot Com. All right, Tiger were 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 twenty twenty three 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 doctor Fauci, by Peter Dazak, the NIH and the scientific community of lab Leak, 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 doctor Fauchi in the origin of COVID. Thus, the intelligence community began to prepare documents they knew inevitably would be subpoena LO and behold, it turned out that for literally months, the Energy Department in 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 a supposedly retired doctor Feans Fauchi 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 doctor Redfield laid out the 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 that one of the worst pandemics in modern history. Let's take a listen again, So one other path of questioning for you, doctor Rifflin. Proponents of this research claim it may result in vaccines or maybe even stop a pandemic.
Doctor 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? Now, in the contrary, I think it probably caused the greatest pandemic or world of scene. 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 supported 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 Cavudo, who, I guess. Let's just say I've 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 to do research that's absolutely critical for the health of the country. Some of that involves manipulating organisms. You want to call it gay 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 of function research, did you get the flu shot to see and 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 and labs
across his country. Conveniently, is also used by big farmer 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 on equivocy.
Though from all 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 shim Acosta 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 prosecuted. Fauci, others and 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's going to 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 want to do harm to me and
or my family. As always, Acosta is too low IQ to ask 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 press 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 the 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 about you 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 lably, 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 ego maniac like him wants. He wants to die a hero, lionized by the press, a savior when he may be the pandemic's biggest villain.
Christ'll actually the House of Representatives just voted yesterday, and if you want to hear my reaction to Sagre's monologue, become a premium subscriber today at Breakingpoints dot Com. Thank you so much, guys for watching. Really appreciated it. Shout out to everybody's signing up to taking advantage of the new Spotify Full Show. I know a lot of you
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