Guest Post by John Derbyshire
The big talking point of the week was the collapse of Silicon Valley Bank, with a couple of hundred billion in assets evaporating overnight and blowing away on the morning wind.
I ought really to be more interested in this than I actually am. I only became a rootless bohemian 22 years ago. Prior to that I was a middle-class shlub, with a salaried job at a respectable firm—an investment bank, in fact.
I wasn’t a hot-shot trader, more’s the pity. I was a back-office worker bee, a cube jockey designing and writing software for the bank’s Credit and Risk Management Department.
To this elderly Credit and Risk Management geek, the SVB collapse looks like a serious failure of Risk Management. It wouldn’t have happened if I’d been cutting their code.
There’s some knotty stuff in Risk Management computing—check out the Black-Scholes model for option pricing, if you’re confident with your calculus.
That doesn’t seem to have been in play with SVB, though. What happened here was just basic banking.
Basic banking: A bank is a safe place to stash your money; but a bank doesn’t just take your money in tens and twenties and lock it up in a vault, it uses your money. It spends your money to buy stuff.
One variety of stuff banks particularly like to buy is bonds. The First Law of bond trading: When interest rates go up, bond prices go down, and vice versa.
The Risk Management team at SVB seem not to have known the First Law. Actual Silicon Valley tech companies, when they were swilling in money, gave scads of it to SVB for safe-keeping. SVB used that cash to buy heaps of long-maturity U.S. Treasury bonds with coupons pegged to the very low interest rates that prevailed until recently.
Then the Fed jacked up interest rates in hopes of pushing down inflation. The First Law kicked in. Those heaps of Treasuries were now worth way less than SVB paid for them.
If the tech firms wanted to withdraw their deposits—which they did, facing business losses themselves—SVB had to sell off the bonds at deep discounts. The cash they got wasn’t enough to cover the withdrawal slips; and the amounts involved were way over the FDIC insurance limits. [Crashing sound.]
So as I said: a failure of Risk Management. Just a gross failure of competence.
So who was in charge of SVB’s Risk Management?
Until a few weeks ago the answer was: nobody. SVB didn’t actually have a head of Risk Management for the last eight months of 2022 [Silicon Valley Bank had no official chief risk officer ahead of collapse but employed DEI executive, by Andrew Miller, Fox Business, March 17, 2023]. A lady named Laura Izurieta had held the title but she stepped down in April last year, I don’t know why. Then for eight months, through to January 4th … nobody.
At that point, SVB finally hired in a head of Risk Management, a lady name of Kim Olson, to work out of the New York office.
In the press release that announced her hiring, Ms. Olson declared that
SVB has an impressive track record of sound growth and remaining true to its strategy of serving the innovation economy. I am excited to lead SVB’s outstanding risk management team and continue to build SVB’s risk management framework and capabilities in this important next chapter of the firm’s trajectory. [SVB Hires Kim Olson as Chief Risk Officer, SVB Financial Group, January 4, 2023]
You don’t say?
But if SVB didn’t have a head of Risk Management for those eight months, they did of course have a Chief Diversity, Equity & Inclusion Officer, a lady named Angela Morris Lovelace. Some positions are too important to be left unstaffed.
And they did have lower-rank executives working on Risk Management. Here’s one of them: Jay Ersapah, Head of Financial Risk Management for the bank’s U.K. branch.
That forename “Jay” is a bit misleading; Jay Ersapah is in fact a female. Well, sort of. She tells us that she identifies as a queer woman of color and is passionate about promoting LGBTQ awareness.
As well as running Risk Management for SVB’s U.K. branch, Ms. Ersapah also served as the company’s European LGBTQIA+ Employee Resource Group co-chair.
As for the “woman of color” thing: I can’t locate the origin of the name “Ersapah,” but it sounds Indian, she looks Indian, and she was born in Birmingham, England, which is now populated mainly by Indians, although I think there may still be a few white English people hiding in odd corners of the city. So Indian’s the way to bet.
From the New York Post, March 14th:
Jay Ersapah, the boss of financial risk management at SVB’s U.K. branch, launched initiatives such as the company’s first month-long Pride campaign and a new blog emphasizing mental health awareness for LGBTQ+ youth.
[ While Silicon Valley Bank collapsed, top executive pushed ‘woke’ programs]
That’s nice; but wouldn’t Ms. Ersapah’s energies have been better employed in, you know, Risk Management?
SVB was, after all, at serious risk…as we now all know.
The head of risk management at Silicon Valley Bank (UK) was busy with Pride Month, and mental health for LGBTQ+ youth. I guess that why she didn't notice billions in deposits going out the door. https://t.co/YyHKtRm2Zn
— Jim Rickards (@JamesGRickards) March 12, 2023
Are you forming some kind of a picture here? I’ve identified four SVB executives, three in Risk Management and one managing the bank’s Diversity, Equity & Inclusion Office. All four are women, two white and two nonwhite. One is sexually eccentric, two are married to men, and Ms. Izurieta’s orientation is not known, not to me at any rate.
All right: Women can of course be competent in Risk Management—I’ve known a couple. And sure: Four is not an impressive sample size. Still, are you getting a hint—a glimpse of a shadow of a hint—that Diversity, Equity, and Inclusion is driving out competence?
My employer for those fifteen years I was coding away for Credit and Risk Management became Credit Suisse. I say “became” because when I joined the firm in 1985 they were First Boston Corporation. They partnered with Credit Suisse in 1988 and became Credit Suisse First Boston; then, after I’d left, just Credit Suisse.
I’m telling you this because it keys to the theme of DEI taking over from competence in investment bank hiring. Poster boy here: Pips Bunce.
The head of global markets at Credit Suisse is a mentally ill "gender fluid" man who sometimes believes he wakes up as a woman. pic.twitter.com/J7QPpNjJiU
— Jordan Schachtel (@JordanSchachtel) March 16, 2023
I have already microaggressed by saying “poster boy.” Pips Bunce is Head of Global Markets Technology Core Engineering Strategic Programs at Credit Suisse, and he’s gender fluid.
That apparently means that he is either male or female depending on how he feels when he wakes up in the morning. Some days he’s a guy, and dresses like a guy in suit and tie; other days he’s a gal, in a dress and a rather fetching blonde wig.
That’s gotten him into trouble with some identity purists. They say that’s not what “gender fluid” means, it’s just, to quote one of them “living out your deep fantasies and legitimizing them socially with a fancy title.”
I can’t rule on the precise point of theology here. This identitarian stuff makes my eyes glaze over. The banking industry at any rate takes Mr. Bunce’s gender fluidity seriously: the Bank of London has nominated him—her, whatever—as the “inspirational role model of the year.”
The head of global markets at Credit Suisse is a mentally ill "gender fluid" man who sometimes believes he wakes up as a woman. pic.twitter.com/J7QPpNjJiU
— Jordan Schachtel (@JordanSchachtel) March 16, 2023
I am, however, going to join the ranks of people wondering on Twitter whether Credit Suisse having a senior executive who doesn’t know what sex he is may somehow be connected with the fact that Credit Suisse’s share price has dived off a cliff.
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Yeah it’s the diversity hires that done it. Nothing to do with government and central bank policies for the last fifty years. Shut up and stop saying Ponzi! Terrorist.
Just call them jews.
And this is all part of the Agenda to destroy the West, one piece at a time…
Next up, more “created” financial crisis’s, look for the 3 day weekend in April to start the Fed’s movement for CBDC, and eliminate Crypto’s and reduce cash use and acceptance.
It’s coming…be assured of it….
If you can’t figure out if your a man or a woman and you got a dick, I would bet you can’t do anything well. Except maybe dress as a woman with a dick.
I was guessing the guy at Credit Suisse decided he was a man if he woke up with a woody and a woman if he did not. Chicks with dicks is certainly not my cup of tea.
Diversity, Inclusion and Equity (DIE) is a better way to say, go woke, go broke.
The true moral of the story is that easy money leads to a cacophony of dalliances.
The sandbox is full of red ants regardless of supposed gender identities.
Two if by Sea
The entire banking system is based on unbelievably unsound economics. EVERY BIT OF IT. With the perverse incentives to management and beyond, nobody could keep this house of cards standing forever, no matter what they did (within the framework of our fractional reserve system). Nobody gets rewarded for doing the right thing, so doing the WOKE thing gets rewarded instead. You’d drive yourself crazy if you tried to actually understand what was going on and engage in productive and responsible actions….so you might just as well throw lesbian parties/retreats and parade around in dresses all day.
Does anyone know if Angela is Linda’s daughter? Lovelace I mean!
Bunce – Dunce. They really enjoy rubbing it in with their names. Wouldn’t YOU have changed your name as soon as you turned 18 after all those years of being ridiculed? No wonder he came out of adolescence with a damaged mind.
IN response to the title, all I can say is YES.
Agree. Sure, government & Fed created the inflation. The Fed has been raising rates to fight that inflation they helped create. A banker who had been hired based on competency would not put the bank in the risk these numbskulls did.
If you know ANYTHING about banking, you know that if you hold long term bonds (even 5 year Treasury Notes) or mortgage-backed securities or fixed rate mortgages (or even portfolio hybrid ARMs like a 7/1), when rates go up, the value of those holdings goes down. If has nothing to do with credit risk. It’s interest rate risk – and it’s simple fucking arithmetic. These banks should have known rates were going up and they should have been holding T-bills, not Note or MBS’s. Idiots.
And the self-solving problem of DEI and “Woke” begins to solve itself.
But there’s a whole lot of solving coming ahead.
That was the strangest fish ever. No, wait, frog. Yeah, that’s right. It was amphibious. Look how it took to the land. Must be one o’ them invasive species, like that vicious Chinese walking fish.
Anyway, PETA’s sure to dox this guy’s kids’ school bus stop or home address, for grabbing the thing by its ears and yanking it out of the culvert.
};^D
And dude gets that ‘yeah by golly’ feeling as he watches the deer run off. No one but he gets it either.
Modern leaders are like the tree leaves outlawing the belief in branches trunks and roots.
They’re much more like mistletoe inviting termites in to destroy the tree they’re parasitizing.
It has certainly destroyed the American car companies
Is DEI Bringing Down the Banking System?
Not before they give the diverse, the equity and inclusive types $5 million each!
After that, go for it! (sarc)
My daughter has 11 years of work experience, she was promted to a trainer in a hospital. Her first job coaching people. She has a new employee, under 30 yo. Employee is a biological female who changes her gender each day depending on how she feels, and of course her pronouns.This person told my daughter this.
My daughter works in a very diverse ethnic environment, she is on a DEI committee. She tells me there is a huge anger problem across all ‘groups’. She says leadership won’t deal with the underlying issues, they are too afraid.
I believe DEI will pull the scab off the anger, hate, and mis trust to the point no one takes action without formal permission. People will die, banks fail, bridges collapse, and in our cities violence will reach vigilante level as LEO behaves in the same woke manner.
One can only hope…
All we primitives who GENUINELY DO NOT GIVE A RATS ASS ABOUT YOUR ‘GENDER’ ‘RACE’ ‘SEXUAL PERVERSION… sorry, ORIENTATION’ or how long your dong or droopy those balls… or tits for that matter… or whatever… ask ‘ARE YOU COMPETENT AT THE FUNCTION TO WHICH YOU ARE EMPLOYED? That is all that matters to we primitives, nothing else.
Shockingly backward and unenlightened, I know.
The very existence of civilization depends on getting that question right. As a fellow said, ‘If you’re breeding Windsors, don’t expect any rocket scientists, they don’t have that kind of sperm anymore.’ But they still get called king and queen and prince and princess and lord and lady and all that. And it shows.
It’s getting to the point that credentials have an assumed inverse relationship to competence all over the field, the qualifiers of note having ABSOLUTELY NOTHING TO DO with COMPETENCE. Gender queer bi-pan-oxy-birthing person of color indeed! We’ll take two, mix n match on the color though! Great look on the promotional material! Meet Pete’s husband Chasten! Pete don’t know fuck from shinola about transpo or running anything more complicated than an anal douche but by golly he’s a queer with a husband and two bought and paid for babies… a comprachico of a sort if you will, so HE’S OUR BOY!
Napalm. Agent Orange. Greek fire (one for the homos) a Neutron bomb would be good. Our demise is assured when who you fuck (or want to) and how you fuck them (or want to) becomes the criterion for any position outside a line pony in a whorehouse.
I always say the same. If we performed a cocaine test on a hair follicle, a colonoscopy and other lower gastrointestinal studies in the rear ends of each of the politicians and middle-to-up-level male managers in the western hemisphere, we would probably find a lot of surprises.
It is my speculation that there is a lot we do not know nowadays about the “secret” habits of people in positions of middle to high power. And I am not talking about innocent hobbies. Less than one month ago, some politicians (deputies and senators) from the PSOE party in Spain were found to be cocaine and prostitute consumers. Not only that, the landlady of the brothel that catered to these men confessed that some of them asked to be penetrated anally by prostitutes wearing a dildo.
If that is what we see…