Progressive official missed Silicon Valley Bank’s warning signs before it collapsed

Progressive official missed Silicon Valley Bank’s warning signs before it collapsed
Mary Daly

President Biden’s massive government spending caused inflation that led to the collapse of a big bank, by shrinking the value of its long-term loans and bonds. Silicon Valley Bank  collapsed last week, in the second-biggest bank failure in American history. As Obama adviser Steven Rattner noted in the New York Times in 2021, Biden spent “an unprecedented amount” of taxpayer money, which resulted in “too much money chasing too few goods.” This led to a rapid increase in inflation, according to economists like Bill Clinton’s Treasury Secretary, Larry Summers.

Progressives in the Biden administration denied the possibility of a large inflation spike, even after some moderate Democrats warned it would happen. Biden’s progressive Treasury Secretary, Janet Yellen, first said that no inflation spike was occurring. Then, she and President Biden claimed that any inflation would be “transitory.” Even after inflation hit 9.1 percent in June 2022, Biden still tried to spend trillions more. In August 2022, Jason Furman, chairman of President Obama’s Council of Economic Advisers, called a Biden policy financed by deficit spending “reckless.” Furman said, “Pouring roughly a half-trillion dollars of gasoline on the inflationary fire that is already burning is reckless.” But Biden still persists in proposing trillions more in new government spending.

Woke progressives denied the dangers of a large inflation spike, because it came about due to the very policies they cherished. A classic example is the woke San Francisco Fed Chief Mary Daly. She is the head of the regional Federal Reserve Bank, which is supposed to “supervise financial institutions” to keep them from failing, and she serves on the Federal Reserve System’s rate-setting committee. But as Paul Sperry notes in the New York Post:

Wokeness has replaced competence and merit across the banking sector, and San Francisco Fed Chief Mary Daly is the poster child of this pernicious trend. A protege of Treasury Secretary Janet Yellen and short-list candidate for Federal Reserve vice chair, Daly was supposed to be supervising Silicon Valley Bank but apparently was too busy playing politics and pushing woke agendas to regulate rogue banks like SVB, the second-biggest bank failure on record.

Daly had other priorities, including climate change, George Floyd and Black Lives Matter, inequities between blacks and whites, LGBTQ+ rights and a host of other woke social-justice issues that had nothing to do with banking and finance. Daly’s Fed bio gushes she’s committed to “understanding the economic and financial risks of climate change and inequities.” Never mind the more existential threat of banks in her jurisdiction amassing mortgage bonds with longer maturities that exposed investors to greater interest-rate risk. In a recent LinkedIn post, Daly appeared sidetracked by racial justice, writing: “What Black voices have I lifted up? Equity & inclusion begins with me. #GeorgeFloyd.” She also posted selfies with local Black Lives Matter activists.

Meanwhile, Daly missed all the warning signs of runaway inflation, which led to the steep interest-rate hikes that made SVB’s investments worthless. In 2021, she said, “I am not thinking that we have unwanted inflation around the corner. I don’t think that’s a risk.” Early last year, moreover, Daly denied the economy was suffering from painful inflation: “That’s not what I see.”… Then in August, she said inflation didn’t affect her personally, so what’s the big deal? “I don’t feel the pain of inflation anymore”… Easy for her to say: She pulls down more than $422,000 a year.

As inflation and interest rates rose, the value of banks’ long-term, low-interest bonds fell, triggering the collapse of Silicon Valley Bank, whose CEO sat on the board of Daly’s very own Federal Reserve Bank. But Daly foresaw none of this.

Her failures to foresee economic problems are not surprising. As Sperry notes, “Daly has no background in banking or managing risk. After dropping out of high school, she worked in a donut shop before eventually getting her GED and entering college, where she became enamored with a socialist professor.  She said she was inspired by Marxian economist Gene Wagner, who ‘has mentored me my whole life.'” Later, she found work as a labor inequality researcher at the San Francisco Fed,  where Sperry says then-SF Fed President Janet Yellen “helped her fail upward.” Daly says Yellen “made my career kind of explode.” In 2018, Daly was named president and CEO of the San Francisco Fed, as “the ‘first openly gay’ regional Fed bank chief.”

As Fortune notes, Daly was not alone in her failures. Federal officials are

facing stinging criticism for missing what observers say were clear signs that Silicon Valley Bank was at high risk of collapsing into the second-largest bank failure in U.S. history. Critics point to many red flags surrounding the bank, including its rapid growth since the pandemic, its unusually high level of uninsured deposits and its many investments in long-term government bonds and mortgage-backed securities, which tumbled in value as interest rates rose.

“It’s inexplicable how the Federal Reserve supervisors could not see this clear threat to the safety and soundness of banks and to financial stability,” said Dennis Kelleher, chief executive of Better Markets, an advocacy group. Wall Street traders and industry analysts “have been publicly screaming about these very issues for many, many months going back to last fall,” Kelleher added. The Fed was the primary federal supervisor of the bank….the fall of Silicon Valley Bank, along with New York-based Signature Bank, which failed over the weekend, are complicating the Fed’s upcoming decisions about how high to raise its benchmark interest rate in the fight against chronically high inflation.

Silicon Valley Bank’s CEO, Greg Becker, was a big “Daly cheerleader” whose bank promoted woke policies and donated to progressive politicians even as its financial situation was rapidly deteriorating. The bank spent millions of dollars on “race-based, discriminatory hiring programs; race-based, sub-prime lending; partisan voter initiatives; and DEI efforts,” according to a think-tank cited by the Associated Press.

Bank officials gave money to Democratic politicians. Fox Business reports:

Greg Becker, the bank’s president and chief executive officer, cut two maximum checks totaling $5,800 to the campaigns of … Senate Majority Leader Chuck Schumer and Virginia Sen. Mark Warner during the 2022 midterm election cycle. The two Democrat senators are the only politicians Becker financially backed directly during the most recent cycle. Becker also gave $2,500 to the New Democrat Coalition Action Fund in May last year. The New Democrat Coalition Action Fund sent $1 million in contributions to numerous Democrat politicians during the 2022 elections….Becker’s most recent donations came on the heels of $5,600 he donated between President Biden’s 2020 campaign and victory fund. Jeffrey Leerink, the chief executive officer of SVB Securities, donated $1,250 to Massachusetts Democrat Rep. Jake Auchincloss.

Meanwhile, the bank did little to guard against financial risks. It had no chief risk officer for most of last year. In London, its local head of financial risk management devoted her time to promoting woke causes, rather than fixing the bank’s risky asset portfolio:

The head of financial risk management at Silicon Valley Bank (SVB) UK spent the months leading up to the shocking bank collapse launching and leading LGBTQ campaigns for the company. Jay Ersapah, the head of financial risk management, organized a month-long pride campaign, a space for employees to share their coming out stories, and co-chaired the European LGBTQ Employee Resource Group, as the bank was at the brink of collapse.

Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department. Hans writes for and has appeared on C-SPAN’s “Washington Journal.” Contact him at


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