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Stu Blog - More important than politics or the economy
6 things you NEED to know about the Silicon Valley Bank collapse
Silicon Valley Bank's collapse is sparking traumatic memories of the 2008 financial crash. Should we be worried SVB is signaling a similar economic catastrophe, or is everyone overreacting to the media's hype? Glenn told his listeners to be "healthily terrified." This event is sure to have ripple effects throughout the economy, but the more you are informed about it, the more you can prepare. Here are 6 things you need to know about Silicon Valley Bank's crash—explained in simple words.
1. The short answer to what happened: SVB didn't have enough money to pay its depositors.
Remember the scene from It's a Wonderful Life when all of the residents make a run on George Bailey's bank demanding their money? Fortunately for them, their money was in the altruistic hands of George Bailey, who used his honeymoon savings to give the depositors the money they demanded.
Silicon Valley Bank's depositors weren't so lucky.
In short, the depositors made a run on Silicon Valley Bank, demanding the withdrawal of their money. But SVB simply didn't have the liquid money available to give their depositors, causing regulators to shut down the bank shortly afterward.
2. It all started with COVID...
Why didn't SVB have enough money for its depositors? To explain this, we have to go back to the pandemic era.
The pandemic saw a rapid decrease in spending and a massive increase in bank deposits. Due to the uncertainty of the future and lockdowns limiting ways to spend money on recreational activities, like restaurants, bars, and other outlets, many Americans stocked up money in their accounts. In fact, SVB's deposits doubled in 2021 alone, bringing in more money than they could lend out to their clients.
To make a return on their available cash, SVB wanted to invest it, as many banks do. Since they had reached their lending limit, they decided to invest it in U.S. Treasury Securities, which are the government's means of funding itself without using taxation (in a nutshell). These are considered "ultra-safe" investments because they are backed by the "full faith and credit of the federal government."
Unlike other forms of investments, investing in Treasuries means the government will do everything within its legal power to pay back the money used to fund itself. In other words, it is typically very safe... so what happened?
3. Then came the magic cocktail—record-high inflation and rising interest rates...
Interest rates ruined the typically "ultra-safe" investment. Due to 40-year record-high inflation, the Fed lifted rates eight times by a total of 4.25 percentage points in 2022, raising interest rates from 0.25 percent to 4.375 percent. This means the value of U.S. Treasuries investments plummeted rapidly. SVB reported that it lost $1.8 billion due to the decreased value of its Treasuries investments after a year of rising interest rates.
This raises the following question: why didn't SVB just weather the storm and wait for interest rates to decrease? There are two issues with this. The first is that, with so many of their assets held up in Treasuries investments, SVB still wouldn't have enough liquid assets to give their depositors during the bank run.
The second issue is that Treasuries investments have a ten-year limit. In 2021 during the Trump administration, interest rates were at an all-time low of 0.125 percent.
The record-fast increase of interest rates in 2022 caused very little chance for rates to go back down to their historic 2021 lows within ten years for banks to make their money back on their investments.
To avoid this, SVB planned to sell their investments at a loss and re-purchase Treasuries investments at the decreased value, giving them an extra ten years to bet on decreased interest rates in the future.
But people caught on to SVB's plan and didn't want to ride with the risk.
4. Account holders withdrew their money... FAST.
As aforementioned, SVP lost $1.8 billion when it sold its depleted Treasuries investments. While they were betting on being able to re-purchase the devalued securities, hoping that they would go up in value in the future with lowered interest rates, investors were worried about the risk.
Once they made the announcement of their $1.8 billion loss, their stocks began to drop, and venture capitalists warned the companies they invest in to pull out of SVB. This had a snowball effect, leading to a "bank run" of depositors demanding to withdraw their money from their SVB accounts.
This led to the perfect storm: SVB's investment losses coupled with the influx of withdrawals were so immense that regulators had to step in and shut the bank down to protect depositors. The government currently "running" SVB, for all practical purposes, is the Federal Deposit Insurance Corporation (FDIC). The FDIC closed SVB on Friday and reopened the bank on Monday, March 13th as the Deposit Insurance Bank of Santa Clara.
5. Some people may lose their money.
Banks insure accounts with $250,000 or less with FDIC insurance. That means, in cases of bank failure, exactly like this one, the FDIC covers all accounts less than $250,000. The FDIC said SVB customers who had less than $250,000 in their accounts will have access to all of their money when the bank reopens. Since it reopened this week, they should have access to their funds.
However, many of SVB's depositors had more than $250,000 in their accounts—it is Silicon Valley after all. Therefore, their accounts were not covered by FDIC insurance. Will they get their money back? There is a chance that they will not.
It is unclear how much SVB currently has to cover uninsured deposits. It is likely not enough. The FDIC has issued a "Receiver's Certificate" to the uninsured account holders with the amount in their account that is not covered by FDIC insurance.
The FDIC said it will pay some of the uninsured deposits by next week by liquidating any additional assets held by SVB. However, if the liquidated assets are not enough, many of SVB's uninsured account holders could lose their money for good.
6. Is this 2008 all over again?
SVB's collapse was the largest bank failure since 2008, when Washington Mutual failed with $307 billion in assets. Its failure, along with the collapse of the Lehman Brother's investment bank, triggered the worst financial crisis since the Great Depression. Are we in danger of repeating 2008?
Some argue that we are not in danger of another economic catastrophe, simply because SVB holds less than 1 percent of the nation's assets. However, as Glenn warns, there is a danger of banks repeating the same mistakes as SVP.
SVP wasn't the only bank to use its surplus deposits to invest in U.S. Treasuries, which means that other banks are wrestling with the depleted value of their securities investments due to rising interest rates.
Bank of America, for example, lost $109 billion in their securities investments due to rising interest rates, the most among its peers—and Bank of America is no small fish in the ocean of assets.
Other major banks recorded other massive losses in their securities investments due to rising interest rates. JP Morgan Chase lost $36 billion, Wells Fargo lost $41 billion, Citigroup lost $25 billion, and Goldman Sachs lost $1 billion. If the little banks collapse, will they get the same effort and attention from the federal government as the "big guys?"
The critic may argue that these are still small values given the incredibly large amount of assets held in banks nationwide. However, this is missing the point. Major banks have majorly invested in securities since the pandemic-era skyrocketing rate of deposits. Now those investments are depleted in value.
They can either sell those investments at a loss, or they can wait and hope that they will recover over time. However, if those investments are no longer liquid, what happens when their depositors come knocking? Will they have enough liquid assets to cover a massive bank run? These are the lingering questions that our banks need to address.
As Glenn says, this will impact you—it is only a matter of time. What will you do to prepare?
Glenn just purchased the entire historical Roe v. Wade archive as a solemn reminder of our nation's past and the vital importance of honoring the sacredness of life. Since Roe was overturned in 2022, many states have been stepping up to protect both their unborn citizens AND the mothers carrying them.
Which states are doing the most to protect their most vulnerable? Here are the top 12 states with the strictest laws against abortion.
Alabama has some of the nation's most protective pro-life measures, banning all abortions in the case of life-threatening circumstances for the mother. That means abortion is banned at every stage of pregnancy. Health care providers found guilty of performing abortions face a class-A felony, the most serious charge besides Capitol Murder, with the potential of carrying a life sentence in prison. However, the pill, Plan B, is classified as "contraception" rather than abortion. Taxpayer-funded Medicaid does not cover abortion procedures except in very limited circumstances.
Alabama is one of the few states to add protections within its state constitution for the unborn. The state:
Acknowledges, declares, and affirms that it is the public policy of this state to recognize and support the sanctity of unborn life and the rights of unborn children, including the right to life.
Like Alabama, Arkansas bans abortion at every stage of pregnancy except in life-threatening situations for the mother. However, Plan B is still considered "contraception" and is legal. Taxpayer-funded Medicaid does not cover abortion procedures except in very limited circumstances. Additionally, Arkansas added the amendment to its state constitution, declaring:
The policy of Arkansas is to protect the life of every unborn child from conception until birth, to the extent permitted by the Federal Constitution.
Idaho bans abortions at every stage of pregnancy with the exceptions of life-threatening situations to the mother and instances of rape and incest. The health care practitioner who gave an abortion must prove "affirmative defense," which means they have to prove in court why the abortion is necessary and meets the legal criteria. Patients approved for abortion must wait 24 hours after counseling to receive the procedure. Anyone who performs an abortion unless it's in one of the approved cases will face felony charges. Like Alabama and Arkansas, taxpayer-funded Medicaid does not cover abortion procedures.
Unlike Alabama and Arkansas, Idaho law does not include explicit constitutional or statutory protections for abortion.
Kentucky has also banned abortion at all stages of pregnancy except in life-threatening situations for the mother. There are no exceptions for rape or incest. However, abortion providers are fighting the all-out ban on abortion through appealing to the state's previous abortion ban after six weeks of pregnancy. The appeal is ongoing.
Though Kentucky voters voted down a proposal to add an amendment to the state constitution banning abortion, the state adopted the following policy towards abortion in 2018:
Children, whether born or unborn, are the greatest natural resource in the Commonwealth of Kentucky.
Louisiana also banned abortion at all stages of pregnancy with no exceptions for rape or incest. However there is an appeal to allow abortions in the case of rape and incest. Healthcare practitioners who violate this ban are subject to criminal prosecution. Moreover, Louisiana adopted an amendment in their state constitution—specifically, the Louisiana Declaration of Rights, banning the construction of any constitutional right to abortion:
To protect human life, nothing in present constitution shall be construed to secure or protect a right to abortion or require the funding of abortion.
Mississippi bans all abortions except to save the life of the mother or in cases of rape or incest that have been reported to law enforcement. Though Mississippi did not adopt a constitutional amendment to ban abortion as a right, the Mississippi Code says:
Abortion carries significant physical and psychological risks to the maternal patient, and these physical and psychological risks increase with gestational age.
Moreover, doctors who perform illegal abortions face civil and criminal charges.
Missouri bans all abortions except in the case of a medical emergency concerning the mother, with no exceptions for rape or incest. Those seeking to get an abortion must prove "affirmative defense," which means they have to prove in court why the abortion is necessary and meets the legal criteria. Minors seeking an abortion through "affirmative defense" must do so with parental consent. Moreover, those seeking an abortion must be offered an ultrasound.
Moreover, Missouri adopted the following statute protecting the unborn:
It is the intention of the general assembly of the state of Missouri to: (1) [d]efend the right to life of all humans, born and unborn; (2) [d]eclare that the state and all of its political subdivisions are a ‘sanctuary of life’ that protects pregnant women and their unborn children; and (3) [r]egulate abortion to the full extent permitted by the Constitution of the United States, decisions of the United States Supreme Court, and federal statutes.
Oklahoma was the first state to successfully ban all abortions after conception following the overturn of Roe v. Wade and continues to lead the way as one of the toughest states on abortion. Exceptions include life-saving procedures for the mother or pregnancies resulting from "rape, sexual assault, or incest." Those who perform legal abortions can be reported and prosecuted criminally under state law HB427 and be charged at least $10,000 per illegal abortion procedure. Violations also include insurance companies or private citizens caught funding abortions.
Though Oklahoma has not adopted a state constitutional amendment concerning abortion, its Public Health Code states that it cannot be “construed as creating or recognizing right to abortion."
9. South Dakota
South Dakota bans all abortions except in life-threatening cases for the mother. There are no exceptions for rape and incest. However, it is legal to travel out of state to get an abortion. There are no state constitutional provisions protecting against abortion.
Tennessee bans all abortions except in life-threatening cases for the mother. There is currently a movement in the Tennessee state legislature to enact exceptions for rape and incest. Like Idaho and Missouri, healthcare practitioners who gave an abortion must prove "affirmative defense," which means they have to prove in court why the abortion is necessary and meets the legal criteria. Those who provide abortions illegally can be criminally prosecuted.
Tennessee's state constitution was amended to supersede a 2000 Tennessee supreme court case, which held:
A woman’s right to terminate her pregnancy is a vital part of the right to privacy guaranteed by the Tennessee Constitution [and that] the right is inherent in the concept of ordered liberty embodied in our constitution and is therefore fundamental.
The new state constitutional amendment reads as follows:
Nothing in this Constitution secures or protects a right to abortion or requires the funding of an abortion.
Texas bans all abortions except in life-threatening cases concerning the mother. There is a movement in the Texas state legislature to provide exemptions for rape and incest.
Moreover, Texas received a lot of heat for its law not only criminalizing providing illegal abortions but enabled citizens to report illegal abortions. However, several cities in Texas are pushing back against the abortion ban. After Dobbs, Texas increased the penalties for performing an abortion up to life in prison, including a civil penalty of no less than $100,000 per abortion performed.
Attorney General Ken Paxton said the following:
Now that the Supreme Court has finally overturned Roe, I will do everything in my power to protect mothers, families, and unborn children, and to uphold the state laws duly enacted by the Texas Legislature.
The cities of Austin and San Antonio passed ordinances preventing city funds from being used to investigate the provision or receipt of abortion care.
12. West Virginia
West Virginia bans abortion at all stages of pregnancy, except in the case of a “nonmedically viable fetus”, ectopic pregnancy, or medical emergency. According to the West Virginia state legislature, "Nonmedically viable fetus" means:
A fetus that contains sufficient lethal fetal anomalies so as to render the fetus medically futile or incompatible with life outside the womb in the reasonable medical judgment of a reasonably prudent physician.
Victims of rape and incest can obtain abortions up to eight weeks after conception, but only if they report to law enforcement first.
In 2018, West Virginians voted to add the following language to the state constitution:
Nothing in this Constitution secures or protects a right to abortion or requires the funding of abortion.
Glenn was CENSORED by Facebook's independent fact-checkers yesterday. Here's the scoop.
This week on the Glenn Beck Program, Glenn and Stu discussed Tucker Carlson's commentary on the newly released Jan 6 Capitol footage, specifically, the curious case of Ray Epps—the man who admitted to inciting the Capitol breach in a text message to his nephew and was let off Scott-free. There is speculation that he could be an F.B.I. plant in the crowd. Regardless of whether or not Ray Epps is an F.B.I. plant, isn't it the right of the American people to ask questions, especially about issues as consequential to our country as Jan 6?
Facebook apparently doesn't think so...
After this clip was published on Glenn's Facebook page, Facebook slapped it with a "partly false" fact-checking label.
As it turns out, the "independent" fact-checkers told Glenn that unless he corrected his narrative about Ray Epps, they would limit his visibility and distribution on Facebook. This would not only affect Glenn. It would affect the entire Blaze crew of talent and personalities. Glenn had one thing to say in response: Go screw yourself, Facebook.
Glenn had one thing to say in response: Go screw yourself, Facebook.
Glenn went on to emphasize that he will NOT be issuing a correction, even if it means his Facebook page’s distribution may suffer as a result. He's not backing down on asking the tough questions and getting to the truth, no matter the cost.
Now is more important than ever to join Glenn and Blaze Media—news and entertainment for people who love America. Big Tech has a "very impressive" track record of censorship—Twitter Files, anyone? To guarantee you have access to the content you want, click THIS link to subscribe to BlazeTV. And don't forget to sign up for Glenn's free email newsletter by entering your email below. Join the fight back against Big Tech censorship.
Are YOUR taxpayer dollars funding these 15 ESG-FRIENDLY states? Find out HERE.
This week, we published a list of the top 14 states FIGHTING against ESG. Now, we are giving you the top 15 ESG-friendly states who are using YOUR taxpayer money to invest in leftist corporations.
Glenn has long warned of the dangers of ESG on American industry, and this list proves the risk. Already, multiple states on this list have divested their funds from gun manufacturers because they don't comply with their leftist agenda. Moreover, the businesses in these states who don't want to integrate left-leaning environmental, gender, and diversity standards into their business won't have any hope of investment from their government.
However, several of the states are considering ESG legislation RIGHT NOW, so there is still time to act. Glenn encouraged his audience to send THIS Utah bill to their governor's desk to protect reliable American industry. If your state is still deliberating integrating ESG standards into their investment strategy, ACT NOW. If they have already integrated ESG practices, you still have the power to fight back. Find out if YOUR state is considering ESG or already adopted ESG investment below.
The Oregon state treasury announced that as a "fiduciary," it will engage ESG monitoring as a factor in its investment strategy:
Acting as a fiduciary, Treasury monitors and manages risks as a prudent global investor, engages as a responsible shareholder, and advocates for investor-friendly practices and regulations, such as improved identification and disclosure of Environmental, Social and Governance (ESG) risks.
In summary, that means if you are an Oregon resident, the state is using YOUR taxpayer dollars to fund liberal environmental and social agendas.
Connecticut's treasurer, Erick Russell, published the state's "Investment Policy for the Connecticut Retirement Plans and Trust Funds" (CRPTF). The plan integrates ESG monitoring as an core value in the state's investment strategy for retirement plans:
The CRPTF supports the integration of environmental, social, and governance (ESG) factors in the investment decision making process, given that such factors can impact both risk and return over the long term. In most cases, the CRPTF will vote FOR shareholder resolutions that request companies to disclose non-proprietary information related to ESG issues.
If you are a Connecticut resident, how do you feel about YOUR government using retirement funds and taxpayer dollars to fund woke ESG causes?
Like Connecticut, Maryland's "State Retirement and Pension System" uses ESG as a core investment value for their states' pension and retirement plans. In fact they have an entire ESG committee dedicated to the task.
You can read the 2022 ESG report for yourself HERE.
Maine's government also has a special branch dedicated to ESG considerations in YOUR retirement plans. The Maine PERS (Public Employee Retirement System) states:
The primary duty of MainePERS is to serve as good fiduciaries to our members. This requires considering sustainability as a vital component of successful long-term investing. We have compiled this Environmental, Social and Governance Report to outline how these factors impact our investment decisions.
Investment's main purpose should be securing the biggest return on investment--that is what investment should be about... right? At least you would hope so if someone else is managing YOUR money. Yet, this consideration takes a back seat if it comes into conflict with the state's liberal ESG standards.
It comes at no surprise that California is one of the original leaders in pro-ESG policy. In 2022, California's Senate passed the first bill in the U.S. requiring all companies statewide generating more than $1 billion in revenue to disclose their greenhouse gas (GHG) emissions. The bill's author, state Senator Wiener, said:
Corporate transparency and accountability are critically important when it comes to addressing our climate crisis. Corporate emissions are a huge contributor to climate change, but frankly, we don’t yet know the scope of the problem. That’s why we need to act quickly and decisively to ensure corporations are reporting their emissions. This is a landmark bill, and today’s vote is a big step forward for California’s fight against climate change.
This bill has been incorporated into a three-bill package being considered by the California state legislature RIGHT NOW. The addition of the other two bills will give California's government the power to use YOUR retirement funds to invest in ESG-friendly businesses, like Connecticut, Maryland, and Maine.
New Jersey's State Investment Council announced that it would be integrating ESG into its investment practices in 2018. The Council stated:
The policy recognizes that material ESG factors are an important component of a comprehensive investment management strategy, and an analysis of these factors should be applied by the Division in connection with the investment and evaluation of the Pension Fund's assets.
If you have a state pension fund in New Jersey, then your money is being used to fund left-leaning corporations.
New York's state retirement fund published a report stating:
ESG factors are a key component of the Fund’s analysis of both short- and long-term financial risks and opportunities.
That means your taxpayer dollars are funding ESG practices. New York also divested its pension funds from gun manufacturers. Unless you are a liberal-leaning business that complies with the Left's woke environmental and social standards, you will not get public investment from your state's retirement fund.
New Mexico's State Investment Council, which is a part of the State Investment Office, adopted ESG standards in their investment practices in 2021. Among their ESG considerations for investment include: resource conservation, climate change, sustainability, gender diversity, equity & inclusion, and others. In other words, unless your business in New Mexico complies with these leftist standards, you won't get any investment from your government. Moreover, if you are paying into New Mexico's pension program, you are FUNDING these leftist businesses.
Massachusetts' Pension Reserves Investment Management Board (PRIMB) unanimously voted to recommend to the full board that pension fund managers vote against companies that:
Failed to align their business plans with the goals of limiting global warming to 1.5 degrees Celsius, as set forth in the Paris Climate Agreement, and/or that have failed to establish a plan to achieve net zero emissions by 2050.
In addition to climate change, Massachusetts has utilized the force of its state pension fund to demand that companies adopt leftist gender and inclusion standards in order to receive funding, becoming one of the most outspoken ESG proponents.
In 2022, Nevada's treasurer announced that his $49 billion portfolio—taxpayer dollars, mind you—will divest from all businesses that sell assault-style weapons. What other industries will they choose to divest from in the future if they don't comply with their leftist standards?
Rhode Island, like California and New York, divested its state pension funds from publicly traded gun companies. The state also uses state retirement and pension funds to invest in ESG-friendly companies.
Vermont's Teasurer’s Office and the Vermont Pension Investment Committee (VPIC) announced that they "consider financial factors and environmental, social, and governance (ESG) factors in their investment decisions." They also hold companies to the climate standards put forth in the Paris Climate Agreement.
Seattle, one of the nation's most left-leaning cities, announced that its City Employees Retirement System will be taking ESG into consideration when choosing their investments. This comes as no surprise from a city in a state that is mandating "100% clean energy by 2040" and holding its first "greenhouse gas allowance auction."
Colorado is considering a bill RIGHT NOW that would require Colorado's Public Employee Retirement Association (PERA) to factor the state’s greenhouse gas emission reduction goals into its investment decisions. If it passes, it would affect one out of every ten Colorado residents who contribute to the PERA fund.
Delaware has been pushing state ESG policy since 2018. The state Senate passed a bill that enables the government—again, using the same justification as a "fiduciary"—to invest using ESG as a consideration. The state also passed a certification process in 2018. Though "voluntary," these certificates are used by the government to identify sustainable businesses. So if you don't have a certificate, you can kiss goodbye to the possibility of state investment.