Silicon Valley Bank Bailout Still Echoes Politically

Happy anniversary. Happy 3-year anniversary to Silicon Valley Bank and the big bailout it got from you and me. 3 years after Silicon Valley Bank collapsed, the political lesson looks clearer than ever. The Biden administration stepped in to stabilize the crisis with this bank and guaranteed all deposits, including amounts far above the normal FDIC limit. Protecting a huge amount of money tied up in Silicon Valley startups and investors. The intervention likely prevented a broader panic, but instead of buying goodwill, it became another example of Democrats helping the tech elite only to get political hostility in return. Many of the loudest figures who demanded action during the crisis later moved sharply toward Donald Trump and the Republican right. The deeper point is not just hypocrisy, though there was plenty of that. It's that Democrats keep acting as if enough generosity toward billionaires will eventually produce loyalty. It will not. When politics becomes a competition over which party can deliver more power to wealthy tech power brokers, Democrats are playing a game they are unlikely to win. So I'd forgotten about— I remember at the time, and people like Marc Andreessen, the biggest Trump supporters, David Sachs, the AI tech czar for Trump, all these guys had tons and tons of money in Silicon Valley Bank. And all these guys love to talk about how libertarian they are, how bad the federal government is, how bad regulation is. But the minute their bank went belly up, what do they do? They want crying, moaning, and groaning. Please, please, please, please, please give us a big bailout. Now, they didn't use the word bailout, and unfortunately, Biden didn't either. He didn't want to remind people, oh, this is kind of like 2008 where the rich people got bailed out, and the middle-class people lost their homes. They didn't want to remind people of that. So a little reminder again, Silicon Valley Bank collapsed in March 2023. The bank was heavily invested in bonds that were losing value because of rate hikes. Tech startups made up the majority of Silicon Valley Bank deposit. I had friends running startups who had their money in it, and it was a very scary several days. And then they were able to breathe a sigh of relief because Uncle Sam bailed them all out. Now, what it's supposed to do is guarantee deposits up to a quarter million dollars. But if you're a startup and you have $20 million and all you get is a quarter million dollars, you're out of business. Lots of panic. So tech investors demanded, they demanded big government come to their rescue and they shouted and they yelled on their little group apps and on Twitter every day. And they got what they want. And then they turned around and gave billions of dollars to Donald Trump. Elon Musk gave $300 million himself. Now this, this comes from a fantastic story in Slate, one of my favorite online publications. I guess it used to be called a publication. It was really kind of the first serious internet-only journalism vehicle started by Michael Kinsley and Microsoft way back in the day. It's gone through various iterations, but I would recommend you go to slate.com. And check out the story yourself and go there at least periodically. So here's what David Sachs said. Again, this is just 3 years ago. Where's Powell? Where's Yellen? Stop this crisis now. He wanted big government. He wanted the chairman of the Federal Reserve. He wanted the Secretary of the Treasury. Those are the names he was referencing to step in and take care of him, coddle him, make him feel good, give him welfare. That's what he wanted. And what did he do with that? He turned right around and denounced all Democrats as anti-business, anti-technology. You hurt our feelings. You said the tech people weren't always brilliant, always on the side of the angels. So even though you bailed us out, even though you kept me from losing millions of dollars, you hurt my feelings because you didn't say I was the greatest private sector entrepreneur in the world. Deserving of sheer unmitigated praise. So I'm going to go all in on your opponents. That's what happened to the Democrats. And the hypocrisy is rich and people need to be reminded. I forgot about it. So thank you, Slate, for mentioning it. Alex Kirshner said this to Slate, everyone involved decided not to call Silicon Valley Bank what it obviously was, a bailout. So, this was kind of a conspiracy. A lot of conspiracies people talk about are nonsense. This actually was a conspiracy. People got together and maybe they didn't meet in dark rooms over cigars, but they all decided it was in their best interest not to call a bailout a bailout because that would hurt the feelings of the tech lords who wanted millions and millions and millions of tax dollars to bail them out. They like to think of themselves as these Ayn Randian strong-willed individualists who don't need government. And it also served the needs of the Biden administration that didn't want to be seen as just giving another bailout to rich people when someone who can't pay their own mortgage doesn't get any bailout. So what do we do with this? The Democrats have got to figure out a different strategy because at some point, if we still have a democracy, they are going to have power again. Again, if our democracy doesn't completely slide into complete autocracy. They're going to have to figure out a different way of dealing with these Silicon overlords, these billionaires, because they don't appreciate anything. When times are good, they say, "It's all because of me, me, me." When times are bad, not only are they the first ones at the government trough, they demand not a bigger piece of the pie, they demand all the pie, and then they want to tell you, oh, I didn't take any pie. So happy anniversary, Silicon Valley Bank.