TPM Reader EG notes a post from our friend Barry Ritholtz in which he notes ten questions or current unknowns about the collapse of Silicon Valley Bank. You can find them here. As Barry points out, if past financial crises are any guide, we currently — that is to say, in real time — have only a very limited understanding of just what happened here and why. Presumably decision-makers at the Fed and FDIC had substantially more information that was the basis of the decisions they made on Sunday. But their understanding is almost certainly limited too. Check his post out. Often a knowledgable set of questions is far more illuminating than opinion and assertion in advance of any real understanding and context.

A few general observations.

Things moved very fast early Sunday evening. As you likely now know, the troika of the Fed, the FDIC and the Treasury axed a second bank — Signature Bank of New York — and decided to guarantee all deposits at Signature and Silicon Valley Bank because of “systemic risk” to the whole banking system. As noted yesterday, the issue at least with Silicon Valley Bank (SVB) seemed to a significant degree to be one of liquidity. It appears to have assets to cover the great majority of its deposits. So the costs to the FDIC should be limited, and perhaps there’s no cost at all. I’m less clear on the exact situation at Signature Bank, which had more exposure to the imploding crypto sector. But I assume it’s broadly similar.

To me the most interesting and noteworthy issue to emerge over the last 48 hours is the debate or really the unclarity about what counts as a “bailout.” The dictionary definition is simple enough. There is no specific or technical meaning. It just means action to relieve someone or some entity in financial distress. But what became clear this weekend is that quite a few people have decided post-Global Financial Crisis that a bailout is relief for shareholders. Making depositors whole is not. That’s just making depositors whole. As long as the bank’s owners get wiped out or take a severe hit, it’s not a bailout.

But there’s little basis for that distinction.

Reading through the often frenzied commentary about the collapse of Silicon Valley Bank (SVB), it’s important to note how much that chatter conflates or confuses what are distinct if complex issues. The most high octane issue is watching the dyed-in-the-wool libertarians and anti-regulation voices who run Silicon Valley suddenly demanding a bailout. Specifically, many are demanding that the FDIC backstop all the bank’s deposits rather than simply those up to $250,000 because of the number of startups which could quickly go under without money to make payroll and cover other ongoing costs of doing business. (SVB’s deposits, roughly 95% of which are uninsured, are heavily concentrated in the tech start-up ecosystem.) It’s a hypocrisy that merits all sorts of guffaws and mockery. But hypocrisy isn’t new or terribly surprising.

One of our TPM Readers had a good sum-up of the collapse of Silicon Valley Bank, the implosion of which started in Silicon Valley, literally and figuratively, but likely won’t end there.

It’s a terrible terrible blot on Silicon Valley culture and a profound refutation of all those libertarian trolls out there.  They fought the regulation that would have subjected SVB to greater scrutiny. This was a valuable community facility that greed destroyed.  This is what “smart contracts” gets you.  My suspicion about Thiel is just that, no facts, but I hope some journo can press him (and some of the other SV bros) on whether they were short sellers in SVB stock before promoting the run.  I realize this stuff is not your natural beat but frankly it has political valence: why should we buy the don’t regulate/trust us from this crew when they would turn around and destroy a community facility that had provided such useful service.  Say what you want about JP Morgan in the early 20th century, but he at least knew it was his duty to insist on a joint effort to stop a panic rather than profit from one.  

The references here are to Peter Thiel. A key accelerant of SVB’s collapse was Thiel’s guidance to all his invested companies to pull their deposits as the bank’s position became more dire.

I mentioned last week that there is this ironic backstory to Tucker Carlson. Even as he is daily exposed in the non-Fox/Trump bubble universe as the epitome of the corruption of conservative media he also, a dozen years ago, had one of the most solid critiques of that same conservative media ecosystem. At CPAC of all places.

I was watching Chris Hayes’ show last night and he referenced the same video I embedded in that Deep Archeology post. He said it could serve as the origin story for the super villain version of Carlson we know today. I wanted to say a bit more about this.

I think I may have been introduced to Carlson once or twice years ago. I do not know him at all. But I’ve been observing him since the beginning of his career about a quarter century ago. In my post last week I said that while Carlson was always a conservative, “his younger incarnation held an air of ironic and quasi-urbane detachment from full wingnut intensity.”

You can treat it as a rule of thumb that most media coverage you’ll read is fairly superficial. (That started as a much harsher first sentence but I thought better of it. You’re welcome.) All you righteous media reporters are now free to attack me over this. But I’m obliged to keep things real and, let’s be honest, it’s a good rule of thumb. The top practitioners at the major outlets tend to have little focus on the actual journalism, which is sorta okay if you’re really covering the business of media, but also have a thinnish grasp of the business dynamics of news as well. Their focus is on industry, news room and board room gossip — a sort of vérité Succession. (Which, yes, is an amazing show.) I was reminded of this when I read a repartee between the two media reporters for Puck last week.

I understand that people are outraged by the Tucker Carlson/Kevin McCarthy video stunt. It’s natural and understandable to react negatively and angrily to liars and traitors. But this is not at all the best or most effective response. The first response is simply mockery. That’s the most logical response and also the most effective. Watch these videos. They’re moments when the insurrectionists weren’t breaking down doors or hitting Capitol Police over the head with flag poles. This is like showing a Zapruder film containing just the part where JFK is happily waving to the crowd in Dealey Plaza. He’s having a great time. Why does Oswald get such a bad rap? Similarly, it’s been shown that probably 99% of the time Osama bin Laden wasn’t blowing up anything. And yet, look at what’s gotten all the focus.

This is more Saturday Night Live skit than outrage.

One of the most apt critiques I read of my post on the deep archeology of Fox News focused on what we might call the counter-revolution of capital, and whether I’d ignored it in telling this thumbnail history of the Movement Conservative counter-establishment. I didn’t ignore it. It’s closely related to, but distinct from, the history I described. They’re like two separate rivers which flow together in the 1970s to create the rightward turn of American politics usually identified with the Reagan revolution. Many of you also referenced a now almost legendary document called the Powell Memo, a genteel call to arms which many now point to as the founding document of the business counter-revolution which began in the 1970s, a kind of Rosetta Stone for unlocking the origins of the modern American right.

I really want to echo David’s point from Friday about this Democratic staff report into Jim Jordan’s “weaponization” hearings. If you’ve been waiting a very long time for no nonsense Democrats to jump in front of Republicans, grab a whole buttload of facts and just pound them over the head with them … well, your moment may have arrived.

The document is more than three hundred pages long and the details are simply amazing. You probably didn’t figure that Jordan was going to unearth a lot of legitimate scandals or secret antifa cells at the FBI or other arms of federal law enforcement. But even if your bar was low, the levels of incompetence and pro-insurrectionist content is still pretty wild.

From TPM Reader NB …

I wanted to comment with a slightly different perspective on your recent discussion of the “lab leak” theory of the origins of COVID: The FBI is terrible at molecular bioscience.