Dingus of the Week: Venture Capitalists
Plus, you all raised over $1,500 for the Trans Mutual Aid fund
From Andrew Carnegie hiring Pinkertons to murder striking steelworkers to the guys behind the Triangle Shirtwaist Factory fire, America’s history has been advanced by the noble pursuit of money at all costs.
This week saw another proud moment in the history of greed with the collapse of the Silicon Valley Bank.
The collapse of the SVB proves that much like 120 New York Mets losses in 1962, losing this hard is a team effort.
First of all, it took rolling back parts of the Dodd Frank bill, which were enacted after the last large bank collapse. I’ll let an Elizabeth smarter than me(aka Sen. Elizabeth Warren) explain it:
S.V.B. suffered from a toxic mix of risky management and weak supervision. For one, the bank relied on a concentrated group of tech companies with big deposits, driving an abnormally large ratio of uninsured deposits. This meant that weakness in a single sector of the economy could threaten the bank’s stability.
Instead of managing that risk, S.V.B. funneled these deposits into long-term bonds, making it hard for the bank to respond to a drawdown. S.V.B. apparently failed to hedge against the obvious risk of rising interest rates. This business model was great for S.V.B.’s short-term profits, which shot up by nearly 40 percent over the last three years — but now we know its cost.
And you know what, she saw this coming. She said, if you roll back this bill, this is going to happen. And it did.
But it wasn’t just the rollback of a crucial law that stabilized a key piece of our economy for no other reason than greed. No, it was also the group think of a bunch of suits who panicked and caused a run on the banks.
Last week, when SVB disclosed its losses, a bunch of venture capitalists panicked and pulled their money from the bank. I imagine it was a lot like that scene in Mary Poppins where all the guys in the black suits start yelling on the floor of the bank, except this time they were just in their Patagonia vests, standing on a ski slope furiously typing into their phones.
Here again, we have another much smarter Elizabeth (this time Elizabeth Spiers) to explain.
The hubris of high-profile libertarians who howl for regulatory intervention (“Where is Powell? Where is Yellen? Stop this crisis NOW,” Tweeted Craft Ventures’ David Sacks) after previously coming out against it is all the more galling. I expect that as soon as the system stabilizes, they’ll all develop amnesia and return to insisting that government intervention destroys innovation.
But that’s not all of the dinguses it required to get to the point where the Federal Reserve had to step in with a huge bailout. Also, the CEO Greg Becker was doing the yeoman’s work on this collapse, by absolutely panicking when he got to the find out part of all his fucking around.
Briefly, Becker lobbied to roll back key parts of Dodd-Frank. When that happened, he then led the bank in some risky behaviors, which resulted in a colossal failure. And when that failure happened, Becker panicked, and as one anonymous employee told CNN, “People are just shocked at how stupid the CEO is. You're in business for 40 years and you are telling me you can't raise $2 billion privately? Get on a jet and fly to Kuwait like everyone else and give them control of one-third of the bank.”
It’s also worth noting in all of this, Becker earned $9.9 million in compensation last year, including a $1.5 million bonus as a result of his work improving the bank’s profitability, along with its risk.
My favorite part of that CNN story, which is clearly from a single source employee trying to save their own butt is this line: "The saddest thing is that this place is Boy Scouts. They made mistakes, but these are not bad people."
Ah, yes, the old Boy Scouts lesson: “Dismantle key banking regulations, profit, and then freak out when those very same actions result in your failure.” You have to learn that to get your Eagle Scout badge.
Anyway, I’m sure all the involved learned a valuable lesson: As long as you aren’t a struggling parent looking for paid leave or affordable childcare, or a person crushed under the weight of predatory loan debt, the government will step in and bail you out.
And Now For Something Good:
Buckle in, doofuses, because there are a lot of good things this week.
On Thursday, I got an email that made me start crying. In response to the newsletter that was published on Wednesday, this community donated over $1,500 to the Iowa Trans Mutual Aid fund. That amount covers an entire month's worth of aid to trans, nonbinary, and gender-diverse Iowans. And in a state that is actively restricting the rights of LGBTQ Iowans, this is no small amount. And it’s also a reminder that there are good people here who want to help and who are committed to supporting all our LGBTQ buddies. And those people are you. If you want to donate, you still can donate through Venmo here. And several of you reached out to say you don’t have Venmo, so here is a link where you can donate through Act Blue or PayPal. Also, if you are trans and you need help, you can apply for aid through this form.
THE IOWA SNOWFLAKE LADY!
Also, in a move we like to see, State Senator Machaela Cavanaugh in Nebraska has decided that if lawmakers are gonna make life difficult for trans people, she’s gonna make life difficult for those lawmakers. Machaela, how are you, girl? Can we send you some tea for your throat? What do you need?
Minnesota just passed a bill giving students free lunch.
In North Dakota, the state Supreme Court upheld the right to an abortion.
You want something good? Three words: IOWA WOMEN’S BASKETBALL! Iowa State women are Big 12 champions. And the University of Iowa women are the #2 seed in the NCAA championships. Also, if you need three more words of a good thing: CAITLIN MFING CLARK!
Also, I’m going to be earnest for one moment. Thanks to my friend Molly, I got to take my kids to see the Iowa women play and my 11-year-old daughter (who is a swimmer) cannot stop talking about those absolutely cool and strong women. So, shout out to every woman who makes being powerful look cool as hell. It makes raising a daughter to love her body just that much easier.
Ope! Sorry. One more earnest note:
In 2020, I stood up to discrimination while working at my local newspaper and I was fired. After that, I started this newsletter and so many of you supported me. And since then, the goal of this newsletter has been to be a magazine — telling the stories of the Midwest and the places where our politics meet our personhood with humor, heart, integrity, and rigor.
This week, because of your support, I was able to pay Molly Monk (the author of this week’s newsletter) an above-market rate for her essay. And I could pay an editor, Serena Golden, to help polish up that essay and make it as good as possible. And because of your support, we could publish a vital essay that was then read on the floor of the statehouse, as lawmakers debated a bill that actively discriminates against trans Iowans.
Writing this little newsletter can feel isolating sometimes. But this week, I remembered how it is important to keep telling these stories, which are our stories. And they aren’t just regional. They’re the stories of the heart of America. Turns out, we are more than just old farmers in diners. And I just want to thank you so much for continuing to support the work I do. Well, the work, *WE* do.
What I’m Drinking:
Well, that’s enough feelings for now. Let’s drink.
This is the part where you hate me because I have to tell you that last weekend I was whisked away to Blackberry Farm in Tennessee with some of my dear friends and had some of the best drinks of my life. While there, I told my friends about a little thing I like to call it when you have a lot of beverages: MulBev. Meaning, it’s a multiple-beverage situation.
It’s admittedly stupid. And my pal Elon Green, who was on the trip hates that I call it MulBev. I actually wouldn’t stop saying MulBev and it made him very irritated. Which obviously made me say it more because I’m an adult. But I’m always delighted when I am in a situation with MulBevs. And last weekend, in one sitting, I had white wine, espresso, water, and a grapefruit cocktail and it was like winning the MulBev Olympics.
In honor of that peak accomplishment, here is a recipe from Blackberry Farm for a “Mountains in the Mist” cocktail.
.25 oz honey syrup
.25 oz lemon juice
.75 oz grapefruit juice
.5 oz Pierre Ferrand Dry Curacao
1.5 oz Casamigos Reposado Tequila (or your tequila of choice)
1 egg white
Angostura Bitters spritz for garnish
The instructions read: “Add all ingredients to a shaker with ice, and shake hard for 10 seconds. Strain the liquid into a clean shaker and dry shake the liquid without any ice for an additional 10 seconds. Pour the contents into a chilled coupe glass.”
I advise you to sip it like you are a venture capitalist in a Patagonia vest.
Also, a picture of me at Blackberry Farm looking like Old Money.
Yes, I am actually an Elizabeth. I do go by Lyz because of my attempt to be unique when I was in 6th grade. No one is more disappointed in me than my mother.
I was not able to get tickets. So if you have tickets and want to take me, I promise I’ll do all the snack runs.
Despite being anti-MulBev, Elon is a great writer. Here is a link to his book.
Don’t be fooled by the fancy words, you can just use Cointreau or Grand Marnier.
One claim out there, from the Wall Street Journal and others, was that SVB failed because of their focus on diversity and woke culture at the expense of their business. This prompted me to take a peek at their executive leadership on their web page, which has since been removed. What I saw was an all white executive team. There were three women, in charge of HR, Marketing, and Chief Risk Officer. In other words, the three jobs of no interest to a bunch of bros. It's worth noting that the risk management position had been vacant since early 2022 and was only filled in December. That women is, in my estimation, the hands down winner of the glass cliff award of 2022.
* While I'm venting I would like to propose a new rule: White people can never, under any circumstances, use "woke" as an adjective.
Fascist Snowflakes!! They are the work of Julie Meyerson Ross, sister of long time local journalist Charlie Meyerson (I've subscribed to his Chicago Public Square for a few years now. It was so cool to see Julie's designs in action! Charlie posted about his sister and the snowflakes in his newsletter a few days ago.