Please Advise! Why Are Banks Failing Again?

[Editor’s note: Steve Burgess is an accredited spin doctor with a PhD in Centrifugal Rhetoric from the University of SASE, situated on the lovely campus of PO Box 7650, Cayman Islands. In this space he dispenses PR advice to politicians, the rich and famous, the troubled and well-heeled, the wealthy and gullible.]

Dear Dr. Steve,

Silicon Valley Bank collapsed last Wednesday. It's the biggest U.S. bank failure since the financial crisis of 2008. On Sunday, Signature Bank of New York was also put into receivership by the Federal Deposit Insurance Corp. And the Biden administration announced that all Silicon Valley Bank depositors would have access to their money.

What happened? Should I be worried?

Signed,

George Bailey

Dear George,

This financial stuff is complicated. Dr. Steve's detailed forensic analysis: the collapse was caused by using the wrong TikTok filter. Someone at Silicon Valley Bank wanted to apply the Responsible Bank Manager filter and hit the Evil Clown filter instead. Depositers got spooked.

The failure of Silicon Valley Bank has certainly caused a panic. One internet celebrity, described as wearing a cap, suspenders and a large moustache, was seen leaping into a bottomless pit. Let that be a lesson: Do not make major investment decisions after consuming mushrooms.

Crypto got blamed initially, which makes sense — in any tech bank failure, crypto is always going to be playing the role of the spouse in an NBC News Dateline murder case. However, analysts have said that although SVB had some crypto assets, this was really just an old-fashioned bank run like the kind made famous in It's a Wonderful Life. In that classic movie, Jimmy Stewart dissuades worried townsfolk from withdrawing their deposits. “Your money's in Joe's house, right next to yours,” Stewart says, “or in the Kennedy house... or a hundred others.”

Alas, Stewart is dead now. Besides, no one would have been convinced by a pitch that went, “Your money's in Juicero, that company whose WiFi-connected juicer turned out to be useless, and that e-book company that got crushed by Apple and Theranos, and a hundred other flop startups with cutesy names.”

Banking is a tricky business. You think you know people, they give you money, and then suddenly they want it back. Last Wednesday SVB revealed it was short $2 billion, and the government stepped in. Dr. Steve sympathizes. One time as a kid he had to tell his parents he was $1.5 billion short on his paper route collections.

Still, you're not supposed to lose money when you put it in a bank. If you're going to lose money at something, it usually has an ad featuring Wayne Gretzky or Connor McDavid.

Do you know what, unlike banking, isn't tough? Hypocrisy! Hypocrisy is easy. Just look at all the conservatives who pushed bank deregulation and now want the government to give them their money back. Like Super Mario eating a mushroom, a bank failure can magically transform a libertarian into a socialist.

In 2018 the Trump administration removed regulations that might have prevented this failure, a point raised later by a member of the Federal Reserve board of governors. But since the failure actually occurred under President Joe Biden, the GOP now says it's his fault. Seems unfair. Imagine coming home from a night out and the babysitter tells you your child is stuck in a heating duct with an angry badger, and it's your fault for going to the movies in the first place.

James Comer, a Republican congressman from Kentucky, actually told Fox News that SVB failed because it was “woke.”

“Woke” is the GOP's unified field theory — it explains everything. Bank failure? Woke bank. Tornado destroyed your town? Woke tornado. If you are planning to take your sick cocker spaniel to a Republican veterinarian, Dr. Steve suggests you save your money.

“Socialism” is the other Republican catch-all for society's ills. Socialism is of course health care or student debt loan forgiveness. There's a financial cut-off point for socialism, above which government assistance becomes stimulus.

On Sunday the Washington Post quoted an insider saying the Treasury Department is “trying to work out [a] legal and politically justifiable way to protect all uninsured deposits.” This would not be socialism, nor would it be woke, unless any of the bailout money goes to George Clooney.

Meanwhile the feds are reportedly seeking a buyer for the failed bank. Dr. Steve knows a guy. Don't let the overalls and the big moustache and the funny hat fool you — plumbers can make some serious coin.