Fifteen years later, a strange sense of déjà vu.
The dust hasn’t yet settled around Silicon Valley Bank’s collapse and people are trying to figure out who, or what, is to blame. We’ll unpack some of the finger pointing, explain what SVB represents 15 years after the 2008 financial crisis and look into what the bank’s failure means for the 2024 presidential race. Plus, the Oscar moments that made us smile!
Here’s everything we talked about today:
“Bank rules rollback contributed to SVB’s failure, critics say” from Marketplace
“Barney Frank blames crypto panic for his bank’s collapse. Elizabeth Warren blames Trump.” from Politico
“As military spending soars, Congress must take critical look at Pentagon budget” from The Hill
Severe erosion in North Carolina from The Washington Post
“Oscars Analysis: Why ‘Everything Everywhere’ — and the Academy — Won” from The Hollywood Reporter
“Naatu Naatu” performance at the Oscars from Variety
“Parties, food deals and more ways to celebrate St. Louis on 314 Day” from St. Louis Post-Dispatch
“Celebrating and honoring Scott Joplin and his legacy in St. Louis” from KSDK
It’s our March fundraiser! Help us meet our goal so we can cover our costs and plan for the future: https://support.marketplace.org/smart-sn
Make Me Smart March 13, 2023 Transcript
Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.
Kai Ryssdal
All right, Juan Carlos, are you ready? Kimberly are you ready? Bam, bam. Bam. Hey, everybody, I’m Kai Ryssdal. Welcome back to make me smart, where we make today make sense.
Kimberly Adams
And I am Kimberly Adams, thank you for joining us on this Monday and woof, what a weekend in terms of news in our bailiwick as it were. So we’re gonna dive into the news fix, which I imagine is pretty obvious. And then we’re going to talk about a story or two that will make us smile. The same story that was Friday it continues, got more interesting over the weekend. Go ahead Kai.
Kai Ryssdal
Yeah, I just saw I had we had Sudeep Reddy on Marketplace this afternoon. And Sudeep pointed out that it was 15 years ago, almost to this very week, in fact maybe this very week that Bear Stearns was rescued by the Federal Reserve and JP Morgan and the greater financial infrastructure of this economy. And it’s just like, bizarro land that first of all, it’s 15 years ago, are you kidding me? But number two, that we’re a little bit back here again, which is sort of the story you did for the show this afternoon. But it’s amazing to me number one, that that, as I said that that was 15 years ago, but also that that it’s happened again, that something like this has happened again, it’s kind of wild.
Kimberly Adams
Yeah, although the origins of it seem to be so much different, like, you know, the mortgage backed securities that brought down the banking sector, I think that the sort of lack of VC funding and the bond issues that brought down this particular couple of banks are not nearly as systemic and baked into the broader economy as mortgages. So you know, but of course there’s contagion and there’s fear. Contagion and fear.
Kai Ryssdal
Absolutely true and right, and this is not that and look, your spot this afternoon was all about how it was allowed to happen. And the way it was allowed to happen was that 10 years after the crisis, right, in 2018, we backed down some of those Dodd Frank regulations. And lo and behold, here we are. And look, there are many, many stories yet to be written and aired about regulatory failures here. And why weren’t California, because its state chartered bank, right? SVB was a state chartered bank. Why weren’t California state regulators looking at their interest rate risk? Right? Why weren’t they keeping a closer eye on that? And we don’t know right now. But regulation is a key part of the story. But it is absolutely true that this is not that. This is not 2008. But still, it makes you go “man, are you kidding me?”
Kimberly Adams
And one of the folks I talked to today, who actually doesn’t blame this on the Dodd Frank rollback, was saying that the Federal Reserve actually still has some tools to keep an eye on banks and should have seen this coming. But of course, there’s all there’s a lot of blame game happening. So Biden this morning, and Elizabeth Warren and her op ed, in the New York Times, blamed it on deregulation and the rollback of these Dodd Frank era rules where if you haven’t had a chance to listen to the show yet, under Dodd Frank, if you’re a bank bigger than $50 billion in assets, you are subject to additional scrutiny. And then in 2018, under the Trump administration, they passed a law that bumped up that cap to $250 billion dollars, meaning that banks like Silicon Valley Bank, whose CEO by the way lobbied heavily on this bill, happened to come in just under that cap, so that they didn’t have that extra oversight. However, in the category they were in they, federal regulators did have the discretion to subject them to that additional oversight if they felt it was necessary. So they could have. It’s just mandatory for the bigger ones. In this category they could have done it. They didn’t. So that’s one piece of it. But I’m so fascinated by sort of how the blame is shifting around. So Barney Frank sat, who of the Dodd-Frank legislation, sat on the board. Yes. Sat on the board of the Signature Bank, which is the one in New York that just got shut down. And he’s saying it’s not the rollback that is responsible for this, that it was their crypto exposure, and that these are different in that they don’t need increased regulations, which is so funny because the guy who pushed for bank regulations is saying they don’t need more bank regulations. Whereas Warren is out here blaming the deregulatory agenda. And this is going to be one of these things that will be absolutely be a talking point, and I’m sorry to start talking about this now, in the 2024 campaign, right? This is going to be in all the GOP adds about, you know, bank failures under Biden. And so the Democrats are already working on their messaging in terms of whose fault it was. And deregulation is a nice point to point, you know, a nice thing to point to in an ad saying, you know, because Trump rolled back the regulations, that’s why we have a banking failure, as opposed to, you know, some federal agency fell down on the job. Yeah, it’ll be interesting.
Kai Ryssdal
Yeah, and I think we ought to just say here for the record, that you’re gonna see a lot of Republicans and already have seen them Ron DeSantis among them, saying that this bank was too preoccupied with, oh, and the Wall Street Journal editorial page too, this bank was to pre-occupied with the DEI and wokeness to keep an eye on what they were supposed to be doing. And let me just say that that’s BS. That that’s just hooey.
Kimberly Adams
Yeah, it is. Yeah it is.
Kai Ryssdal
Deeply, deeply cynical political garbash. Anyway go ahead.
Kimberly Adams
I wouldn’t say cynical is the word we’re looking for there.
Kai Ryssdal
No, but we don’t want to get that E rating. So you know
Kimberly Adams
Yes, yes, yes, yes.
Kai Ryssdal
What else you got?
Kimberly Adams
So there’s an interesting op ed in The Hill, because one of the other things that’s going on right now that we’re not paying that much attention to because the big, giant explosion, implosion of banks, is that Biden, the Biden ministration, the representatives from the various federal agencies are on the hill, and giving press conferences, sort of unpacking what their section of the budget proposal looks like. So Space Force wants more money, and everybody wants more money. Now, we know that not all of this is going to happen because Congress holds the power of the purse. But there’s an op ed, in the Hill about Pentagon funding and military spending, and the budget requests for fiscal year 2024 for the Pentagon alone, not including, you know, nuclear weapons and Department of Energy and other things is $842 billion, right? That’s a whole lot of money. And a lot of it doesn’t necessarily get the same level of scrutiny that other spending programs do. And so William Hartung, who wrote this opinion piece, points out that there are a lot of systems and projects and, you know, big planes and bombers and ships that the Pentagon has said they don’t want anymore. And it doesn’t work for the way that the military operates today. But because of lobbying because a lot of these things are built in very key districts and because of vested interests, members of Congress are unwilling to stop funding these programs because there are people in businesses in groups that have a vested interest in like providing the maintenance on a brokedown bomber for the next 20 years. And, you know, as much as we wring our hands about not finding funding for things, it is it amazes me that there are programs and projects that that our military says, “we don’t need these or want these anymore” and yet we’re still paying for them.
Kai Ryssdal
Mhm. Mhm! It’s amazing. It’s amazing.
Kimberly Adams
Yeah. What’s your other thing?
Kai Ryssdal
Well, my other thing is I mean, it’s not newsy, it’s more of a feature piece in the in the Washington Post. It’s an amazing story about erosion on the Outer Banks of North Carolina and one very specific island and, the reason it caught my eye was there was a graphic about the the rise of sea level on this little strip of nothingness sand. No pejorative intent. I mean, it’s a strip a strip of sand out in the middle of nowhere off the off the Outer Banks. And what’s that what that’s doing, the houses collapsing and water coming in. It’s wild. It’s just wild. And it’s analogous to the story that Amy did out of out of Louisiana a number of weeks ago for How We Survive. The climate is coming for us, man. The climate is coming for us.
Kimberly Adams
Yeah, and people still buy these houses.
Kai Ryssdal
I know!
Kimberly Adams
It’s astonishing to me. That that graphic is really impressive. It maps out the shoreline in 1946, 1980, 1852, 2002 and 2020. And it’s just going back and back and back. Wow. And there’s a really cool, sad of course, video of a house literally falling into the ocean and being carried out to sea. All right, anyway. Let’s smile.
Kai Ryssdal
Alright, I got nothing today. So you’re gonna have to carry the burden because there was nothing that caught my eye and honestly, I’m a little grumpy today anyway, so you know.
Kimberly Adams
That’s okay. It’s a Monday. That’s normal. Did you watch the Oscars over the weekend?
Kai Ryssdal
I did sort of in and out, you know, walking, walking back and forth in front of the TV. But yeah, yeah.
Kimberly Adams
What do you think?
Kai Ryssdal
So I happen to see Ke Huy Quan’s acceptance speech, which was amazing for Everything Everywhere All At Once, which you you had pointed out his career trajectory, like 10 days ago, and that was kind of amazing. And also, Michelle Yeoh’s which was great.
Kimberly Adams
Yeah. Yeah. I mean, that was I didn’t watch it, because I just don’t. But I thought it was just so interesting to wake up and look at the, you know, just the sweep. And it’s a great movie, I really enjoyed it, it was so different. And, you know, I love the fact that a good movie actually gets a chance and that, you know, racism doesn’t block people from well, always block people from getting the success that they deserve. And so it was really nice to see that film and those actors win so much at the Oscars. So that made me smile. And I also watched the performance from that Triple R movie. It makes me want to actually watch the movie.
Kai Ryssdal
Oh you mean the song? RRR? Yeah. How about that song?
Kimberly Adams
Yes yes and the dance was amazing. yes.
Kai Ryssdal
And that dance number was amazeballs.
Kimberly Adams
I want to like go and watch the movie now after just seeing that dance number.
Kai Ryssdal
And then did you see the guy come and do his acceptance speech?
Kimberly Adams
No, I didn’t
Kai Ryssdal
Huge fan of the carpenters apparently this guy. Sort of an upper, middle aged Indian guy. And he sang his acceptance speech in what was the song “we’ve only just begun to live” that carpenter song. He did that except change the lyrics to his his you know, talking about his movie. It was great. It was great. It was great.
Kimberly Adams
Oh, that’s so nice. I’ll go back and watch it. Super fun. I’m still trying to find the video of Lady Gaga apparently like rescuing somebody who fell down on the red carpet like a photographer like fell out and she like ran over and her evening gown to help him up. All right, my other make me smile I’m doing in advance because I know tomorrow is the deep dive may not have made me smiles on deep dive day. So in case anybody wasn’t aware, tomorrow, March 14, is a very special day. And no, I’m not talking about Pi Day. I’m talking about St. Louis day because our area code is 314 and so I’ve included an article from the St. Louis Post-Dispatch with a variety of ways that you can celebrate St. Louis day, including different snacks and foods and you know, listen to some Nelly. And Scott Joplin.
Kai Ryssdal
There you go. And Scott Joplin! That’s true. Cool
Kimberly Adams
Yeah. All right. So this weekend, we actually passed the 10% mark on our goal for our March fundraiser. So thank you to everybody who helped us get there. And it’s also you know, this weekend, the three year anniversary of the World Health Organization marking the start of a pandemic, which has been hard for all of us. But we’ve had make me smart, and Kai and Molly and now Kai and me helping us all get through it. And so I do hope that because make me smart, and Marketplace, have you know showed up for ya’ll that you all will be able to show up for us if you are able. Your donation will help us get you know, from 10% to 100%. Just like one extra zero makes a lot of difference. And we have a $150,000 goal this week so that we can keep planning for the future and bring you more amazing content across all of our platforms. So you can donate now at marketplace.org/givesmart. Of course, we’ll have the link in the show notes. If you are able we would be grateful.
Kai Ryssdal
We would indeed. We would indeed
Kimberly Adams
Make me smart is produced by Courtney Burgsieker. Today’s program was engineered by Juan Carlos Torrado. Ellen Rolfes writes our newsletter and our intern is Antonio Barreras.
Kai Ryssdal
Marissa Cabrera is the acting senior producer of this podcast. Bridget Bonner is the director of all podcasts. Francesca Levy is the Executive Director of Digital and On Demand. So there’s the hierarchy of who’s in charge.
Kimberly Adams
Bridget is the director of everything everywhere all at once.
Kai Ryssdal
Oh, snap. That was very good. That was very good.
Kimberly Adams
Yes! Yes! Thank you!!
Kai Ryssdal
Well done. Well done. It’s all about the segway on this podcast.
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