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The Silicon Valley Bank (SVB), the 16th-largest bank in the United States, failed because its leaders used poor judgment in making ill-advised investments. They invested heavily in long-term Treasury bonds that had low-interest rate returns. As interest rates rose (which meant SVB was losing money), they didn’t have the required reserves to cover their outstanding loans. Instability in the tech industries, where they were heavily invested, contributed to the bank’s denouement. While the Federal Deposit Insurance Corporation usually insures deposits up to $250,000, President Biden agreed that the federal government would cover deposits “at no cost to taxpayers.” Because SVB primarily served startups and heavy hitters, about 85 percent of its deposits were uninsured. Ordinary Americans don’t get the bailout that SVB depositors got, but Biden and others justified it by saying they wanted to avoid further instability in the banking industry. While the president says that taxpayer dollars won’t be used in the SVB bailout, that remains to be seen.
Financial experts will examine the reasons for the SVB failure for months, if not years. Daft Republican legislators, with absolutely no facts, have concluded that the failure of the bank is a result of “woke” business policies. They’ve not defined what they mean by such policies, but some see their vacuous rhetoric as a swipe at diversity practices to which most banks adhere. The intellectually challenged Congresswoman Marjorie Taylor Green (R-Ga.) wrote, “the fools running the bank were woke and almost because broke .”Donald Trump, Jr., the business icon whose daddy’s companies have regularly declared bankruptcy, also weighed in on this matter. Florida Gov. Ron DeSantis, who is pinning his presidential hopes on making anti-wokeness a national mantra, said the bank was “so concerned with DEI (diversity, equity, and inclusion) that they got diverted from their core mission.” Wall Street Journal writer Andy Kessler suggested that the SVB board, primarily white male, may have failed because its 12-persin board — 45 percent women, with one African American and one GBLTQ+ member — was diverse.
Florida’s DeSantis is a leader among those who decry consciousness. His 2022 “Stop Woke Act” prohibits instruction on race or diversity that makes white folks feel “remorse or guilt.” The law prevents employers with more than 15 employees from mandating diversity training. DeSantis has rejected the Advanced Placement Black Studies curriculum for Florida public schools. These aren’t dog whistles but outright shouts of racism and anti-Blackness. These rabid Republicans will blame anything — bank failures, derailed trains, and more — on so-called “wokeness,” and non-critical thinkers are perfectly willing to go along with those distortions. Would a bank with all white male directors have acted differently than the current directors of SVB did? One might argue that an all-white male board might have performed even worse. The financial press offers many reasons why SVB failed, and throwing “wokeness” into the equation is a distraction.
Though I get the concept, I’ve never been fond of “woke” rhetoric. It’s been used as shorthand to describe conscious, racially and politically aware people, who are often progressive. A dear friend and diversity consultant, Howard Ross, says, “It doesn’t matter whether you are woke or not; it’s what you do when you get out of bed.” In other words, anyone can mouth the rhetoric, but actions speak louder than words. It is unfathomable that a profit-making, predatory-capitalist bank led by white men can be described as mistakenly “woke” after its failure. Marjorie Taylor Green and her ilk are looking for excuses in the face of their stumbles, which include the loosening of Dodd-Frank regulation that might have prevented the SVB bank failure.
“Woke” has nothing to do with recent bank failures (New York’s Signature Bank also failed at the same time as SVB did). Still, racist Republicans have carefully honed their rhetoric that even common decency is described as “woke.” Don’t believe the hype, folks. While our nation remains majority white, it is rapidly diversifying, and denial will not stop demographic change. DeSantis and his anti-Black cronies would like to turn the clock back to the “good old days” and erase history by denying it. Despite DeSantis’ efforts, neither the past nor diversity will be erased.
Malveaux is an economist, author and dean of the College of Ethnic Studies at California State University, Los Angeles.