Senator Ted Cruz, ranking member of the Senate Commerce Committee, has declared that he will investigate the failure of Silicon Valley Bank (SVB). The Republican from Texas is backed by the Department of Justice and the Securities and Exchange Commission in asking why SVB fell, making it the second biggest bank failure in U.S. history. Cruz also questions alarming workplace practices following the bank's failure, such as the absence of a risk assessment officer in the midst of volatile years in the technology industry.
Ted Cruz Rips Into SVB Bank: You Were More Focused on Woke Nonsense Than Sound Banking https://t.co/2KODBjiKFH
— Townhall.com (@townhallcom) March 17, 2023
Silicon Valley Bank is well-known as a lending institution for tech firms, however it has been criticized for extensively exploiting the tech sector. Senator Cruz proceeded to condemn the bank, stating that it paid more attention to "woke" nonsense than to basic banking principles. He also questioned if the Federal Reserve Bank of San Francisco provided the bank special treatment.
— Senate Commerce Republicans (@SenateCommerce) March 16, 2023
Things Silicon Valley Bank was interested in:
✅Black Lives Matter activism
Things SVB was NOT interested in:
— Ted Cruz (@tedcruz) March 15, 2023
Cruz said in a letter to Tim Mayopoulos, CEO of Silicon Valley Bank, "SVB's actions raises concerns that it may have been more preoccupied with pushing progressive ESG principles than with following basic banking procedures." Six months after the George Floyd protests started, the bank appointed a chief diversity, equity, and inclusion officer despite not having a chief risk officer during the period when the VC market was sliding downward.
Cruz questioned the participation of the Federal Reserve Bank of San Francisco in the incident. He argued that the Fed neglected to address SVB's plainly dangerous structure despite having hundreds of economists who could have done so on its team. In addition, he stated that the San Francisco Federal Reserve may have been excessively preoccupied with "politically-charged research and activism on environmental, social, and governance ("ESG") and diversity, equity, and inclusion ("DEI") issues, such as climate change and racial justice."
Cruz issued letters to SVB and the SF Fed demanding responses in light of these concerns. It remains to be seen what the inquiry will reveal, but Cruz's concerns underline the need for banks to prioritize basic banking standards above political correctness.