I mean, really. How can a bank like Silicon Valley Bank ‘fail’? When they had $209 billion in assets and $175 billion in deposits?
That’s, like, $384 billion. More money than I am likely to earn in my entire life.
Doesn’t $384 billion mean anything any more?
If I had that much money in assets and deposits, I would sure as hell arrange things so I didn’t fail.
And I don’t understand how that can even happen. How does $384 billion simply up and vanish? I’ve seen $20 vanish out of my wallet, but when I think back, I can usually tell you where it went.
If $384 billion disappeared out of my wallet, I know I could tell you where it went.
When I was trying to understand this situation, I happened on a brilliant painting by Russian artist Vladimir Makovsky, entitled “The Collapse of a Bank,” painted in 1881. (Shown at the top of this column.)
Apparently, banks were having some financial troubles in Russia in 1881.
I love the details in Makovsky’s painting. Like, the guy at the far right, who is stuffing some papers inside his jacket.
And the elderly lady in the elegant fur-lined coat, accusing the policeman who looks like he came to work a little bit drunk. (I would be drunk, too, if I were him.)
The policeman probably didn’t have any money in the bank. He was probably living paycheck to paycheck.
And then we have the well-dressed wife who is trying to console her husband, who looks like he might be in the military? I can almost hear him. “Why! How can this be happening to me? Forty years of dedicated service to my country, and this is how I am treated?”
The poor old widow, sitting on the bench by the window, dejected, with her daughter tending to her.
These are the people who suffer when $384 billion vanishes into thin air. The common people. Yes, we have every right to get drunk.
Luckily, you and I live in America, where banks get bailed out by the taxpayers. Bankers in America don’t have to worry. Uncle Sam has bottomless pockets.
Reportedly, Jerome Powell — chair of the Federal Reserve — blamed the management at Silicon Valley Bank.
“At a basic level, Silicon Valley Bank management failed badly,” he said.
Yes, maybe that’s an understatement, Jerome.
I have failed, on occasion, and sometimes badly. But never that badly.
According to CBS News, Mr. Powell declined to elaborate on his view of what, exactly, went wrong at SVB, or address whether Fed regulators could have prevented the bank failures. (Silicon Valley Bank wasn’t the only failure this month, as we are finding out.)
“My only interest is that we identify what went wrong here. How did this happen, is the question.”
Well, I could answer that question. The management of Silicon Valley Bank were careless with depositors’ money, and did risky stuff they should never have done.
That’s how bankers get rich. By doing risky stuff with our deposits. It’s not enough, for them, to hold on to our money and keep it safe. They fell compelled to play around in the stock market, and with mortgage-backed securities… with our money… and then, sure enough, $384 billion disappears.
So, go ahead, Joe. Bail them out. Again.