Welcome. Its verdict was Senator Ted Cruz Ben Ferguson with you and Senator the biggest news story of the week. Many Americans are concerned about their banks. They're concerned about banking. They're concerned about what's happened with a fallout of Silicon Valley Bank. This wasn't a little bank. This was a big bank. It was one of the top three failures of my lifetime. I want to get your initial reaction to this and what you've heard, at least from those in Washington that were supposed to be keeping an eye on this bank and many others every day. Well, this has been a very chaotic time in the markets. We've seen two different banks fail, including the sixteenth largest bank in the United States, Silicon Valley Bank, with two hundred and ten billion dollars in assets. That has called into question a lot of the financing for the tech industry. It's called into question a lot of the financing for venture capital, and it has potentially imperiled a significant number of midside banks. In response to this, the Biden administration rolled out a major bailout, conveniently bailing out the politically collected connected friends of the Biden White House in a way that we'll have lasting repercussions for the economy and will almost certainly incentivize future bad conduct by other banks. When you look at this from a standpoint of it being called a bailout, a lot of people have been calling it that, but this administration keeps saying, this is not a bailout. Is this a bailout? Or the taxpayers going to have to put the bill for this? Is this a delayed bill for taxpayers? How should the American people be reacting to this? This is one of bailout, and the Biden administration is spinning like crazy trying to pretend that it's not. What they are arguing is the money. There's one hundred and twenty billion dollars in a fund that is paid by banks, and they say, well, that's not taxpayer money. Well, the last time I checked banks or taxpayers, banks pay quite a bit in taxes. Not only that, but the fees that the banks are paying into this fund they get from in turn extracting revenues from consumers, and so it comes from you and me. At the end of the day. This money didn't grow on a magic money tree that the Biden administration has that they decided to spend well over one hundred billion dollars in response to this. And here's what happened. So, Silicon Valley Bank has two hundred and ten billion dollars in assets, and a big chunk of its portfolio was held in securities and in particular long term government debt. And in fact, it had the highest securities portfolio as a percentage of total assets of any bank, and it took long term government debt. But then the Fed's policies raising interest rates made that government debt made those bonds go down in value about twenty percent. And what happened is that the bank was required to mark to market those securities at their current valuations. Now, if it held those government bonds to maturity, it would get the full payout, but their worth about twenty percent less because the interest rates they were taken out at are significantly lower than where interest rates are today. That in turn caused an old fashioned run on the bank, which is depositors and in particular venture capital companies and tech companies began removing their funds in mass, and it was one after the other after the other that began pulling their their funds out. Now, look, we all know, uh from from classic movies like It's a Wonderful Life, that that a bank doesn't have all of the deposits just sitting there in cash, that it it in the case of an snlor or a mortgage bank, it is loaning them out. Uh. In in this instance, the bulk of the funds were in securities, including in particular both government debt and mortgage bonds. And so when when a ton of the depositors are saying, give me my money back, uh, they ran ran into real trouble because there was a liquidity mismatch. In other words, the the assets they had available to give the depositors back where were less than the demand for from the depositors to get it back. And so California stepped in and shut the bank down on Friday. Uh. And what happened next was a series of things. So one consequence, the FDIC, the Federal Deposit Insurance Corporation, insures deposits up to two hundred and fifty thousand dollars. So if you or I have our checking account or savings accounts, most of us presumably have less than two hundred and fifty thousand dollars in our checking or savings accounts. Those are entirely insured by the government. And that's true for anyone that has less than two hundred and fifty thousand. That's also true for smaller businesses, for mom and pop businesses, smaller businesses, but above two hundred and fifty thousand, that is not supposed to be insured by the FDIC. And in the case of Silicon Valley Bank, a massive amount ninety six percent of their deposits were uninsured. In other words, it had a bunch of big, big, big deposit accounts way above the two hundred and fifty thousand dollars insurance cap. The folks that had deposits in Silicon Valley Bank that were above the two hundred and fifty thousand dollars insurance cap include a ton of politically connected venture capital firms in Silicon Valley and startups. So, for example, Circle, the payment technology firm, had three point three billion dollars in Silicon Valley Bank. That's a bunch of money. Three point three billion is way way way above two hundred and fifty thousand. There were a total of one thousand and seventy four private equity and venture capital funds that were banking with Silicon Valley Bank. And if you look at some of the players. In addition to Circle, Roku, the streaming service, had four hundred and eighty seven million dollars in Silicon Valley Bank. The crypto lender Block five, which is now defunct, had two hundred and twenty seven million. Roadblocks, the online gaming platform had one hundred and fifty million, and BuzzFeed, the online media platform, had about fifty six million in cash and cash equivalence at the end of twenty twenty two, the majority of which was held at Silicon Valley Bank. So you have a lot of big players with huge amounts of money. Now, these players chose to deposit it knowing what the FDIC limits were. They didn't seek to ensure it, they didn't seek to find any other way to protect it. They counted on number one that they believe Silicon Valley Bank was too big to fail. But number two what happened is the White House very quickly responded to Democrat politicians and tech firms and VC firms expressing dismay, and the Biden administration said, you know what, We're going to guarantee every deposit doesn't matter how big that was. Any way, you look at it a massive bailout, and it was a bailout that was done, was done with no authorization from Congress. You know, you think back to the financial crisis that we saw in two thousand and eight. Two thousand and eight, there was a financial crisis and there was a massive bailout. And what happened there The George W. Bush administration went to Congress and they seek sought to pass what was called TARP, the Troubled Asset Recovery Program, and the first time, in fact, the House of Representatives voted it down and didn't give the Bush administration the bailouted asked for. Then ultimately it did, and actually the response to TARP prompted in significant part the Tea Party, the enormous wave of fed up voters that were very unhappy. Why rich connected bankers were getting billions in government money. It king here. The Biden administration didn't go to Congress, didn't think Congress had anything to say at all. They just announced it, we're giving away money. Why because these are Democrat donors and people we listen to, and you know what, mom and pop across this country are going to pay more. Local community banks in Texas and all across the country are going to end up paying more because the Biden administration decided to bail out Silicon Valley Bank and to ignore the FDIC cap and give unlimited guarantees on deposits. Senator, I want to ask you a question, and this really is a political one, about the money that was coming out of Silicon Valley Bank. We've now been told that apparently they had given more than seventy three million in donations to Black Lives Matter and related organizations. Before I get your thoughts on that, though, I want to tell you about Chalk. If you're a real American man and you want to maximize your masculinity by boosting testosterrum levels up to twenty percent over ninety days, you can actually do it with the Chalk Male Vitality Stack. Now, if you're a guy and you just feel like you've lost a little bit of that edge, you're getting a little bit older, and you don't feel like yourself anymore, you can fight back again that war on masculinity, and you can do it with Chalkhoq. They are here to help real men just like you and I maximize our testosterrum levels by boosting them up to twenty percent over ninety days. If you are ready to get that feeling back, then you need to check out Chalk. Go online to choq dot com use the promo code Ben for thirty five percent off any Chalk subscription for life. Plus you can cancel Anytimehoq dot com promo code Ben for thirty five percent off. So you see, and you go back to what you're mentioning about how the FDIC works. Right, and you're supposed to have a limit to the first two hundred and fifty thousand hours of your deposits in a bank. But what Biden basically said is, hey, this is a woke liberal bank, and we cover it all. Even though the people that were putting the money in the bank knew that they were overly leveraged here, that they didn't have as sound of a lending practice as many other banks, they didn't care. So are we now at the point where we have a government that says, Okay, you can act recklessly in the financial industry, specifically in banking, as long as you are in the right side of giving to democrats or to parties, We'll cover you no matter how reckless you are no matter how big you are, and as long as you're on our team and donating to things that we believe in, will get your back up to one hundred percent of all of your deposits. Look, they're an awful lot of folks. They're going to take exactly that message from this. This was an act of cronyism. It was also critically your right that Silicon Valley Bank was one of the most woke banks in America. It was very into ESG, it was very into climate change, was very into Black Lives matter, it was very into everything except apparently having a risk management process to protect its depositors deposits and in fact, stunningly, Silicon Valley Bank for a year prior to this didn't even have a chief risk management officer at a bank that's pretty damn important. They didn't have this hedged against interest rate risk. They were gambling that the FED would not raise rates, even though they'd been screaming from the mountaintops that they were going to raise rates. A bank that is being prudent can hedge its investments against interest rates rising by by investing also in counterbalancing investments that will go up when interest rates go up. They didn't do that. They were focused on on virtue signaling. They were focused on showing just how woke they are. And it's important understand also look back the bank here. These bank officers were bad actors. Let me let me tell you two data points that have been vastly underreported. Number one, hours before the bank was shut down, Silicon Valley Bank gave very substantial bonuses to all of its employees. They just began writing checks to everyone hours before they were shut down. Data point number two, in the two weeks prior to their being shut down, the CEO and the CFO sold large amounts of stock. The CEO ended up making over a two million dollar profit from selling stock less than two weeks before the bank was shut down. Both of those indicate corrupt intent. I'll tell you I had a conference call in the last forty eight hours with all one hundred senators were invited to participate, and Treasury in the FDIC was on there, and I asked, I said, look, is it true that they gave bonuses to their employees? Number one, If so, I think it is outrageous. And number two, has there been any investigation into clawing back those bonuses that because they're literally this. As far as I'm concerned, this is like Bonnie and Clyde. They're robbing the bank as they know their customers deposits are about to get blown up. And much of the media coverage has ignored the exceptionally bad conduct by the bank's officers. You look at Joe Biden and one of the things that I think is very concerning about this Biden bail out. That's what it is, we should call it. That is the question now? Is this it's a big step towards government control of the banking system. Because if the government can choose winners and losers, and those are supposed to be giving oversight of the banks are not doing it. That's another huge problem here. And many people may not understand this, and I want you to explain it for people. The San Francisco Fed was who was supposed to be supervising this bank. They either were asleep at the wheel or didn't care that they were acting this way. And if this is what the government's going to do, is this almost a play where they say, Hey, we're just going to have a United States government now that is in total control of the banking system that would be terrible for this country. Well, the banking system right now is already heavily regulated, and bank regulators are deeply involved in examining the books, and they should be involved. That there is a very important role for bank regulators to make sure that banks are being honest in our have sufficient liquidity, and are sufficiently financed. I will note that this crisis Number one was heavily encouraged by government policy, and in particular, the FED for years pursued an easy money policy of quantitative easing of virtually zero percent interest rates that was flooding the system with cash. Number two, the federal government also treated long term government debt as essentially risk free, zero risk government debt. Dodd Frank, rammed through by the Democrats, heavily encouraged banks to invest in long term government debt. Now, one thing that does is it helps finance the massive debt that the Democrats are racking up on their spending spree. They want banks incentivized to buy that debt. But Number two, that may make sense in a non inflation inflationary environment, but when inflation exploded under Joe Biden and the Fed was forced to raise rate suddenly, that long term government debt. You you had a spread there that severely reduced the value of those bonds, and it was government policies that encouraged it on the front end, but then on the back end. You were absolutely right. The regulator of Silicon Valley Bank was the San Francisco Fed. The San Francisco Fed bears an enormous amount of responsibility for what happened, because this wasn't subtle, This was out in the open, this was it was obvious. Silicon Valley Bank was not hiding from the regulators that it had massive amounts in long term government debt. The FED obviously knew that the Fed was raising interest rates, and yet this exposure, and the Fed presumably knew that this interest rate exposure was not hedged. And so you have to ask what the hell happened at the San Francisco Fed. You don't you go look at the San Francisco Fed website. They, again, like Silicon Valley Bank, have all sorts of woke things on there about ESG and climate change, in black lives matter that was their priority, but actually doing their job. It is striking that the San Francisco Fed did nothing until it was too late. Will there be any accountability for the government regulators, specifically in San Francisco on this, and is there anything that Washington can actually do to hold them accountable, Because if you basically simplify this, you pretty much had a group of wealthy speculators that got really upset that their money ended up being locked into a ten year obligation at less than a two percent return. That's how one person put it. So then they basically said, all right, we'll convince the government it was in everyone's best interest to help them out of their jam at the expense of everyone else. And the Fed, who's supposed to be looking at this, watching this bank, they just didn't do a darn thing. Well, there needs to be accountability, and I do have a high level of confidence that at a minimum, there'll be accountability in the House, that the House is going to hold the regulators to account. What what Joe Biden and the Democrats and what the corporate media are trying to do is, of course, blame it all on Trump because that's the that's their answer for everything. But if you look at who the bank regulators were that were in charge of it, it wasn't Trump. Trump's been out of office for over two years. It was the Biden administration asleep at at the wheel. And when you look at it, also look the moral hazard this will create is dangerous and it's a basic principle. When you socialize the risk and you individualize the benefits, you always get bad behavior. Silicon Valley Bank, but was behaving according to the incentives that they were getting from the Biden administration. They believe they'd be bailed out. And in particular, look at it's worth noting the bailout it is not even directed at Silicon Valley Bank, at its stockholders, that they have not been bailed out, at least not yet. The people who were bailed out were all of the depositors that had tens of millions or hundreds of millions or even billions of dollars in Silicon Valley Bank. By the way, among many of those depositors billions of dollars worth were Chinese companies. Silicon Valley Bank one of the things that specialized in was was doing banking for foreign companies, foreign investors, and so this was also a bailout of China by the Biden administration. But you know what ordinarily happens when a bank fails, and listen, we've seen banks fail. That's part of how the system operates. When the bank managers take on too much risk, the bank should fail because you don't want to incentivize. You don't want to have everyone taking on too much risk. K. But what ordinarily happens when a bank fails is number one, they try to find a private buyer, and they did try to do that over the weekend, and apparently they were unable to do so. There were several bids submitted, but the Biden FDIC refused to take any of the bids. They found the terms unacceptable. Now we don't know what those terms were. I can tell you in the call with the senators. We asked them and they didn't tell us. They didn't want people to know what the terms were. But the Biden administration turned down a private buyer that could come in and take over the bank, which is ordinarily what happens. Also, ordinarily what happens when a bank fails is that everyone's deposits up to two hundred and fifty thousand dollars get held completely harmless, and those are guaranteed by the FDIC and the larger deposit holders. Typically they're not blown out there. They're larger. Deposits are not typically worthless, but they usually take a haircut somewhere in the fifteen to twenty percent range. And that's what ordinarily happens when you put a whole bunch of money in one place at risk without it being insured. All of the depositors knew that, but they also knew that with their friends and the Biden administration that they could count on higher returns from Silicon Valley Bank playing fast and loose, and if things went south, I think they were confident that Democrats in Washington would have their back. Last question on this for you, Senator. They're obviously having two banks back to back collapse is going to make people uneasy. When you guys were on these calls, did anyone talk about other banks or there's still concerns that other banks may have been following and doing the same exact thing that Silicon Valley Bank was doing. Before I get that, I want to tell you real quick about our friends that gusts of precious medals. You know what's been happening in the headlines in the economy, you know what's been happening with interest rates, and if you've been saving for retirement for a long time, you know how important it is to hecked your assets. 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Call them eight seven seven four the number four Gold Ira eight seven seven the number four Gold Ira or online augusta Precious Metals dot Com. Use my name Ben, and you will actually get fees for up to ten years for free Augusta Precious Metals dot Com. Now other banks do, in fact have hard times over the next week or two. Is the policy now officially of the Biden administration to bail out those banks ensure one hundred percent of deposits no matter what, because of the president that they just created out of thin air. So possibly, but when you look at other banks, look, there's always a risk of contagion, and that is a serious concern. It's a concern that regulators need to take seriously. It's a concerned that Congress needs to take seriously. We need our banking system to be safe and secure. There are very few off atty banks though, that are similarly situated to Silicon Valley Bank. Number one. It was almost exclusively big tech and venture capital companies that were deposits in Silicon Valley Bank. And the way Silicon Valley Bank would work is they'd they'd bank a big venture capital firm, and the VC firm would require that all their portfolio companies. So a venture capital firm is a firm that takes investments from individuals and institutions and then invest typically in the tech space early stage and startup companies, and so a VC firm could have dozens or even hundreds of tech startups that it's invested in, and many of the vcs would require every one of the tech startups that had they had to bank at Silicon Valley Bank, and so you ended up having a very high concentration. That degree of sector exposure makes a bank quite vulnerable, that it was so intertwined with tech that tech has been hard hit lately, and in particular the high interest rates. Much when you look at startups, they are often heavily funded by debt, and a startup it could often be a pretty long ramp up before they have significant revenue. And so Silicon Valley Bank had greater exposure because they were so sector concentrated in one area. Number One. Number two the fact that ninety six percent of their deposits were uninsured. That is an unusually high number that they were not their business was not having lots and lots of depositors under the FDIC insurance camp. It wasn't a lot of mom and pops. It was big firms with hundreds of millions or billions of dollars and number three. As I mentioned, they had the highest securities portfolio as a percentage of total assets of any bank, and so that they ended up with their investment strategy, they were particularly vulnerable to this interest rate risk. As I mentioned, for a year they didn't even have a risk officer. They didn't hedge significantly against this risk, and so their behavior invited this. Now there is a risk of other, particularly midsize banks, facing a run on the bank, and so we don't want that any any bank is potentially vulnerable to a run on the bank. We want people to have confidence in our banking system. But you asked about the moral hazard. Will others behave recklessly because of this? And I think the odds are are quite high now. A second element that was created is what's called a FED Emergency Lending Facility. It's also known as a thirteen three facility because that's where the authority appears in the Federal Reserve Act, in which case the Feds said they will loan money for a year to back up long term government debt, and they will value that money not its current market value, but at its original purchase price. That's yet another bailout. I mean, let's let's be clear that that is billions and billions of cash that is on the hook to go out from the FED, and it really is striking. Look, we could have a reasonable public policy debate listening to economist examining what needs to be done to ensure stability in the banking system. But the Biden administration didn't want that that that reasonable debate. It didn't want the input of Congress, it didn't want the public to have any say in it. It just wanted political cronies to make that decision. And I think that is a very dangerous dynamic. Yeah, it is concerning, and it seems like the new policy of the Biden administration is be a woke bank and support an advocat and give donations to woke ideology and we'll back you up no matter what. And if that's what they're going to do for the next two years, that's going to be very concerning. Should be an issue moving into the next presidential election, no doubt about that. I want to talk also about China and really what's happening with climate change and with regulations. There are a couple of different Biden administration clips that have emerged recently highlighting just how much the Democrats are in bed and idolizing the Chinese Communist Party. These were moments that when you hear them, you're kind of in shock because you've got the Biden administration officials who are actually saying that they think China is amazing. You have Jennifer Granholm, you also have another individual with a Biden administration and here's a montage of what they've been saying. We're hopeful that, you know, we can all learn from what China is doing. But the amount of money that they're investing in clean energy is actually you know, encouraging. This isn't about decoupling. Now, that's not the only Democrats that seem to be idolizing the Biden at ministration or excuse me, China from the Biden team, you have former Speaker of the House Nancy Pelosi, who also came out saying this about China. But here's the thing. You can't just go after China with a cudgel. You have to say, we have to live on this planet together. How can we work together to save the planet from climate change? They're essential in that discussion. How can we try to work together with them on issues where we can find common ground center China. Just so people understand this, they're one of the biggest, if not one of the biggest, polluting industrialization in the world. They don't ever play by the rules that we are that these Democrats are trying to force us to play by. And not only are the Chinese laughing at us on all of our global warming issues that are just stifling our economy and manufacturing, but they're making money off of these bad policies and polluting at record levels that we've never seen before, and now you've got Democrats praising them. You know, it really is striking that in the same week that the Biden administration does a bailout for their politically connected friends in tech, including billions of dollars of a bailout for Chinese tech companies and Chinese investors, that you have a coordinated pivot from the Democrats to embrace China. Those three clips you played, the first one was from Jennifer Granham, the Energy Secretary, the second one was from Gina Raimondo, the Commerce Secretary, and the third one was from Nancy Pelosi, the former Speaker of the House. All of them are saying almost exactly the same thing. They're all saying we've got to work with China as our partner in fighting climate change. Now, those are the talking points, and I will give Democrats credit. Democrats have incredible message discipline. The fact that you see all three of them saying almost word for word the same thing is clear. They got a message. They're sticking to it. It just so happens the message is laughably absurd. So never mind all the human rights abuses, the torture, the murder, the genocide, the concentration camps. Never mind the culpability for COVID and millions of lives lost and trillions in damage done to the global economy. Never mind the intellectual property theft that China pursues as a business as a state policy. Set all that aside, just focus on the environment. Communist China is the single biggest polluter on the face of the planet, year after year after year. It's the biggest pollution pollutor on the face of the planet. But wait, pen, you might say, Nancy Pelosi just says they're doing great things on the environment. Let me read you an amazing statistic. China right now is in the process of building more new coal capacity than all of the existing US coal plants combined. I want you to pause and think about that for a second. So US capacity right now, we have one hundred and ninety eight gigawatts of coal fired electricity generation capacity. That's of the end of twenty twenty two, one hundred and ninety eight gigawatts. How much do you think China is building, has planned, and is building right now, No clue. So it has one hundred and fifteen gigawatts under construction, and it has another two hundred and fifty gigawatts plant and so all told, that is three hundred and sixty five It is nearly double the current US capacity. That's what they are building and planning right now. And these plants are designed to last forty years or longer. And so to watch the Democrats pivot in, Look, this has nothing to do with the environment. We've talked before about how today's Democrat party is structurally pro China. Why because they're major stakeholders, big tech, big business, big university's, big Hollywood, all of them are in bed with China. And so when you have Pelosi in the Democrats reading the CCP's talking points about how great they are on the environment, it is both deeply dishonest and laughably absurd. One other thing on China. You look at this moment and in history, I think this is going to go down as an extremely pivotal moment because it's not just this administration basically fan boing over China and rewriting history of what China's doing on climate change, but they're also allowing for China to really take advantage of what's happening with Russia and Ukraine. You can bine these two things together on top of what they're doing with TikTok and spying, and what they've been able to do with just stealing anything they can get their hands on through hacking in this country and stealing trade secrets. The list goes on and on. Before we go through that, I want to tell people about Patriot Mobile real quick. Patriot Mobile is the only Christian conservative cell phone company in the US. And if you're sick and tired of what companies that you pay money to every month and then they actually go against your values, You've got an option now in the cell phone industry. 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This administration so far and correct me if I'm wrong, has still to date not one time stood up to China on any significant issue. I would even say probably any basic issue. What is the reasoning behind them being so obsessed with allowing China to just continue to grow, do whatever they want to do and putting American second to China in this policy? Well, Number one that's been Joe Biden's policy his entire life. He has been an advocate on behalf of China for decades. If you remember the video of him saying, come on man, China's our friend, Come on man. He has been arguing that for a long time. Number two, by the way, he's also been perfectly happy to be personally enriched and for his family to be personally enriched, because, as we've talked about at length on this podcast, Hunter Biden made millions of dollars monetizing his father's political connections, and that included, as we know from the Hunter Biden laptop, ten percent for the big guy, for Joe Biden himself. So he's had a personal financial stake in doing business with China for a long time. But number three is the structural reality of the Democrat Party today. They're not willing to stand up to China because the people who fund them depend upon China. The people who form the core of the Democrat Party today are deeply intertwined with China, and actually the Silicon Valley Bank situation illustrates that perfectly. Biden was all too eager to bail out his buddies in tech, but in doing so, he's providing billions and bailouts for China as well, and that's because the two are deeply intertwined. I'll point out on top of that, if you say, well, we'll wait a second. You know, isn't that an exaggeration. In the last Congress, I forced to vote on the Senate floor on my amendment that said the federal government should be prohibited from buying electric vehicles or batteries manufactured using slave labor in concentration camps and China. You would think this would be an easy vote. You would think this would be one hundred and nothing. Every single Democrat except one, Every Democrat except Joe Mansion voted no. And that is a structural dynamic of how today's Democrat Party is organized. Yeah, it's certainly not looking out for the American people first and foremost, and we're seeing that. Whether it's the bank, whether it's China, whether it's climate change. The list goes on and on. Senator, Always a pleasure. Don't forget if you're listening. We do this show three days a week, so make sure you have that subscribe and or the auto download button so you get each and every episode. When we're dealing with what's really happening in Washington, with what's happening with the banks right now. You won't get this anywhere else, so makes you subscribe, Hit that auto download button and rute us to five story review. It helps us reach a lot of new listeners. When you do that, it matters a whole lot and how they rate podcasts. 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Welcome. Its verdict was Senator Ted Cruz Ben Ferguson with you and Senator the biggest news story of the week. Many Americans are concerned about their banks. They're concerned about banking. They're concerned about what's happened with a fallout of Silicon Valley Bank. This wasn't a little bank. This was a big bank. It was one of the top three failures of my lifetime. I want to get your initial reaction to this and what you've heard, at least from those in Washington that were supposed to be keeping an eye on this bank and many others every day. Well, this has been a very chaotic time in the markets. We've seen two different banks fail, including the sixteenth largest bank in the United States, Silicon Valley Bank, with two hundred and ten billion dollars in assets. That has called into question a lot of the financing for the tech industry. It's called into question a lot of the financing for venture capital, and it has potentially imperiled a significant number of midside banks. In response to this, the Biden administration rolled out a major bailout, conveniently bailing out the politically collected connected friends of the Biden White House in a way that we'll have lasting repercussions for the economy and will almost certainly incentivize future bad conduct by other banks. When you look at this from a standpoint of it being called a bailout, a lot of people have been calling it that, but this administration keeps saying, this is not a bailout. Is this a bailout? Or the taxpayers going to have to put the bill for this? Is this a delayed bill for taxpayers? How should the American people be reacting to this? This is one of bailout, and the Biden administration is spinning like crazy trying to pretend that it's not. What they are arguing is the money. There's one hundred and twenty billion dollars in a fund that is paid by banks, and they say, well, that's not taxpayer money. Well, the last time I checked banks or taxpayers, banks pay quite a bit in taxes. Not only that, but the fees that the banks are paying into this fund they get from in turn extracting revenues from consumers, and so it comes from you and me. At the end of the day. This money didn't grow on a magic money tree that the Biden administration has that they decided to spend well over one hundred billion dollars in response to this. And here's what happened. So, Silicon Valley Bank has two hundred and ten billion dollars in assets, and a big chunk of its portfolio was held in securities and in particular long term government debt. And in fact, it had the highest securities portfolio as a percentage of total assets of any bank, and it took long term government debt. But then the Fed's policies raising interest rates made that government debt made those bonds go down in value about twenty percent. And what happened is that the bank was required to mark to market those securities at their current valuations. Now, if it held those government bonds to maturity, it would get the full payout, but their worth about twenty percent less because the interest rates they were taken out at are significantly lower than where interest rates are today. That in turn caused an old fashioned run on the bank, which is depositors and in particular venture capital companies and tech companies began removing their funds in mass, and it was one after the other after the other that began pulling their their funds out. Now, look, we all know, uh from from classic movies like It's a Wonderful Life, that that a bank doesn't have all of the deposits just sitting there in cash, that it it in the case of an snlor or a mortgage bank, it is loaning them out. Uh. In in this instance, the bulk of the funds were in securities, including in particular both government debt and mortgage bonds. And so when when a ton of the depositors are saying, give me my money back, uh, they ran ran into real trouble because there was a liquidity mismatch. In other words, the the assets they had available to give the depositors back where were less than the demand for from the depositors to get it back. And so California stepped in and shut the bank down on Friday. Uh. And what happened next was a series of things. So one consequence, the FDIC, the Federal Deposit Insurance Corporation, insures deposits up to two hundred and fifty thousand dollars. So if you or I have our checking account or savings accounts, most of us presumably have less than two hundred and fifty thousand dollars in our checking or savings accounts. Those are entirely insured by the government. And that's true for anyone that has less than two hundred and fifty thousand. That's also true for smaller businesses, for mom and pop businesses, smaller businesses, but above two hundred and fifty thousand, that is not supposed to be insured by the FDIC. And in the case of Silicon Valley Bank, a massive amount ninety six percent of their deposits were uninsured. In other words, it had a bunch of big, big, big deposit accounts way above the two hundred and fifty thousand dollars insurance cap. The folks that had deposits in Silicon Valley Bank that were above the two hundred and fifty thousand dollars insurance cap include a ton of politically connected venture capital firms in Silicon Valley and startups. So, for example, Circle, the payment technology firm, had three point three billion dollars in Silicon Valley Bank. That's a bunch of money. Three point three billion is way way way above two hundred and fifty thousand. There were a total of one thousand and seventy four private equity and venture capital funds that were banking with Silicon Valley Bank. And if you look at some of the players. In addition to Circle, Roku, the streaming service, had four hundred and eighty seven million dollars in Silicon Valley Bank. The crypto lender Block five, which is now defunct, had two hundred and twenty seven million. Roadblocks, the online gaming platform had one hundred and fifty million, and BuzzFeed, the online media platform, had about fifty six million in cash and cash equivalence at the end of twenty twenty two, the majority of which was held at Silicon Valley Bank. So you have a lot of big players with huge amounts of money. Now, these players chose to deposit it knowing what the FDIC limits were. They didn't seek to ensure it, they didn't seek to find any other way to protect it. They counted on number one that they believe Silicon Valley Bank was too big to fail. But number two what happened is the White House very quickly responded to Democrat politicians and tech firms and VC firms expressing dismay, and the Biden administration said, you know what, We're going to guarantee every deposit doesn't matter how big that was. Any way, you look at it a massive bailout, and it was a bailout that was done, was done with no authorization from Congress. You know, you think back to the financial crisis that we saw in two thousand and eight. Two thousand and eight, there was a financial crisis and there was a massive bailout. And what happened there The George W. Bush administration went to Congress and they seek sought to pass what was called TARP, the Troubled Asset Recovery Program, and the first time, in fact, the House of Representatives voted it down and didn't give the Bush administration the bailouted asked for. Then ultimately it did, and actually the response to TARP prompted in significant part the Tea Party, the enormous wave of fed up voters that were very unhappy. Why rich connected bankers were getting billions in government money. It king here. The Biden administration didn't go to Congress, didn't think Congress had anything to say at all. They just announced it, we're giving away money. Why because these are Democrat donors and people we listen to, and you know what, mom and pop across this country are going to pay more. Local community banks in Texas and all across the country are going to end up paying more because the Biden administration decided to bail out Silicon Valley Bank and to ignore the FDIC cap and give unlimited guarantees on deposits. Senator, I want to ask you a question, and this really is a political one, about the money that was coming out of Silicon Valley Bank. We've now been told that apparently they had given more than seventy three million in donations to Black Lives Matter and related organizations. Before I get your thoughts on that, though, I want to tell you about Chalk. If you're a real American man and you want to maximize your masculinity by boosting testosterrum levels up to twenty percent over ninety days, you can actually do it with the Chalk Male Vitality Stack. Now, if you're a guy and you just feel like you've lost a little bit of that edge, you're getting a little bit older, and you don't feel like yourself anymore, you can fight back again that war on masculinity, and you can do it with Chalkhoq. They are here to help real men just like you and I maximize our testosterrum levels by boosting them up to twenty percent over ninety days. If you are ready to get that feeling back, then you need to check out Chalk. Go online to choq dot com use the promo code Ben for thirty five percent off any Chalk subscription for life. Plus you can cancel Anytimehoq dot com promo code Ben for thirty five percent off. So you see, and you go back to what you're mentioning about how the FDIC works. Right, and you're supposed to have a limit to the first two hundred and fifty thousand hours of your deposits in a bank. But what Biden basically said is, hey, this is a woke liberal bank, and we cover it all. Even though the people that were putting the money in the bank knew that they were overly leveraged here, that they didn't have as sound of a lending practice as many other banks, they didn't care. So are we now at the point where we have a government that says, Okay, you can act recklessly in the financial industry, specifically in banking, as long as you are in the right side of giving to democrats or to parties, We'll cover you no matter how reckless you are no matter how big you are, and as long as you're on our team and donating to things that we believe in, will get your back up to one hundred percent of all of your deposits. Look, they're an awful lot of folks. They're going to take exactly that message from this. This was an act of cronyism. It was also critically your right that Silicon Valley Bank was one of the most woke banks in America. It was very into ESG, it was very into climate change, was very into Black Lives matter, it was very into everything except apparently having a risk management process to protect its depositors deposits and in fact, stunningly, Silicon Valley Bank for a year prior to this didn't even have a chief risk management officer at a bank that's pretty damn important. They didn't have this hedged against interest rate risk. They were gambling that the FED would not raise rates, even though they'd been screaming from the mountaintops that they were going to raise rates. A bank that is being prudent can hedge its investments against interest rates rising by by investing also in counterbalancing investments that will go up when interest rates go up. They didn't do that. They were focused on on virtue signaling. They were focused on showing just how woke they are. And it's important understand also look back the bank here. These bank officers were bad actors. Let me let me tell you two data points that have been vastly underreported. Number one, hours before the bank was shut down, Silicon Valley Bank gave very substantial bonuses to all of its employees. They just began writing checks to everyone hours before they were shut down. Data point number two, in the two weeks prior to their being shut down, the CEO and the CFO sold large amounts of stock. The CEO ended up making over a two million dollar profit from selling stock less than two weeks before the bank was shut down. Both of those indicate corrupt intent. I'll tell you I had a conference call in the last forty eight hours with all one hundred senators were invited to participate, and Treasury in the FDIC was on there, and I asked, I said, look, is it true that they gave bonuses to their employees? Number one, If so, I think it is outrageous. And number two, has there been any investigation into clawing back those bonuses that because they're literally this. As far as I'm concerned, this is like Bonnie and Clyde. They're robbing the bank as they know their customers deposits are about to get blown up. And much of the media coverage has ignored the exceptionally bad conduct by the bank's officers. You look at Joe Biden and one of the things that I think is very concerning about this Biden bail out. That's what it is, we should call it. That is the question now? Is this it's a big step towards government control of the banking system. Because if the government can choose winners and losers, and those are supposed to be giving oversight of the banks are not doing it. That's another huge problem here. And many people may not understand this, and I want you to explain it for people. The San Francisco Fed was who was supposed to be supervising this bank. They either were asleep at the wheel or didn't care that they were acting this way. And if this is what the government's going to do, is this almost a play where they say, Hey, we're just going to have a United States government now that is in total control of the banking system that would be terrible for this country. Well, the banking system right now is already heavily regulated, and bank regulators are deeply involved in examining the books, and they should be involved. That there is a very important role for bank regulators to make sure that banks are being honest in our have sufficient liquidity, and are sufficiently financed. I will note that this crisis Number one was heavily encouraged by government policy, and in particular, the FED for years pursued an easy money policy of quantitative easing of virtually zero percent interest rates that was flooding the system with cash. Number two, the federal government also treated long term government debt as essentially risk free, zero risk government debt. Dodd Frank, rammed through by the Democrats, heavily encouraged banks to invest in long term government debt. Now, one thing that does is it helps finance the massive debt that the Democrats are racking up on their spending spree. They want banks incentivized to buy that debt. But Number two, that may make sense in a non inflation inflationary environment, but when inflation exploded under Joe Biden and the Fed was forced to raise rate suddenly, that long term government debt. You you had a spread there that severely reduced the value of those bonds, and it was government policies that encouraged it on the front end, but then on the back end. You were absolutely right. The regulator of Silicon Valley Bank was the San Francisco Fed. The San Francisco Fed bears an enormous amount of responsibility for what happened, because this wasn't subtle, This was out in the open, this was it was obvious. Silicon Valley Bank was not hiding from the regulators that it had massive amounts in long term government debt. The FED obviously knew that the Fed was raising interest rates, and yet this exposure, and the Fed presumably knew that this interest rate exposure was not hedged. And so you have to ask what the hell happened at the San Francisco Fed. You don't you go look at the San Francisco Fed website. They, again, like Silicon Valley Bank, have all sorts of woke things on there about ESG and climate change, in black lives matter that was their priority, but actually doing their job. It is striking that the San Francisco Fed did nothing until it was too late. Will there be any accountability for the government regulators, specifically in San Francisco on this, and is there anything that Washington can actually do to hold them accountable, Because if you basically simplify this, you pretty much had a group of wealthy speculators that got really upset that their money ended up being locked into a ten year obligation at less than a two percent return. That's how one person put it. So then they basically said, all right, we'll convince the government it was in everyone's best interest to help them out of their jam at the expense of everyone else. And the Fed, who's supposed to be looking at this, watching this bank, they just didn't do a darn thing. Well, there needs to be accountability, and I do have a high level of confidence that at a minimum, there'll be accountability in the House, that the House is going to hold the regulators to account. What what Joe Biden and the Democrats and what the corporate media are trying to do is, of course, blame it all on Trump because that's the that's their answer for everything. But if you look at who the bank regulators were that were in charge of it, it wasn't Trump. Trump's been out of office for over two years. It was the Biden administration asleep at at the wheel. And when you look at it, also look the moral hazard this will create is dangerous and it's a basic principle. When you socialize the risk and you individualize the benefits, you always get bad behavior. Silicon Valley Bank, but was behaving according to the incentives that they were getting from the Biden administration. They believe they'd be bailed out. And in particular, look at it's worth noting the bailout it is not even directed at Silicon Valley Bank, at its stockholders, that they have not been bailed out, at least not yet. The people who were bailed out were all of the depositors that had tens of millions or hundreds of millions or even billions of dollars in Silicon Valley Bank. By the way, among many of those depositors billions of dollars worth were Chinese companies. Silicon Valley Bank one of the things that specialized in was was doing banking for foreign companies, foreign investors, and so this was also a bailout of China by the Biden administration. But you know what ordinarily happens when a bank fails, and listen, we've seen banks fail. That's part of how the system operates. When the bank managers take on too much risk, the bank should fail because you don't want to incentivize. You don't want to have everyone taking on too much risk. K. But what ordinarily happens when a bank fails is number one, they try to find a private buyer, and they did try to do that over the weekend, and apparently they were unable to do so. There were several bids submitted, but the Biden FDIC refused to take any of the bids. They found the terms unacceptable. Now we don't know what those terms were. I can tell you in the call with the senators. We asked them and they didn't tell us. They didn't want people to know what the terms were. But the Biden administration turned down a private buyer that could come in and take over the bank, which is ordinarily what happens. Also, ordinarily what happens when a bank fails is that everyone's deposits up to two hundred and fifty thousand dollars get held completely harmless, and those are guaranteed by the FDIC and the larger deposit holders. Typically they're not blown out there. They're larger. Deposits are not typically worthless, but they usually take a haircut somewhere in the fifteen to twenty percent range. And that's what ordinarily happens when you put a whole bunch of money in one place at risk without it being insured. All of the depositors knew that, but they also knew that with their friends and the Biden administration that they could count on higher returns from Silicon Valley Bank playing fast and loose, and if things went south, I think they were confident that Democrats in Washington would have their back. Last question on this for you, Senator. They're obviously having two banks back to back collapse is going to make people uneasy. When you guys were on these calls, did anyone talk about other banks or there's still concerns that other banks may have been following and doing the same exact thing that Silicon Valley Bank was doing. Before I get that, I want to tell you real quick about our friends that gusts of precious medals. You know what's been happening in the headlines in the economy, you know what's been happening with interest rates, and if you've been saving for retirement for a long time, you know how important it is to hecked your assets. 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Call them eight seven seven four the number four Gold Ira eight seven seven the number four Gold Ira or online augusta Precious Metals dot Com. Use my name Ben, and you will actually get fees for up to ten years for free Augusta Precious Metals dot Com. Now other banks do, in fact have hard times over the next week or two. Is the policy now officially of the Biden administration to bail out those banks ensure one hundred percent of deposits no matter what, because of the president that they just created out of thin air. So possibly, but when you look at other banks, look, there's always a risk of contagion, and that is a serious concern. It's a concern that regulators need to take seriously. It's a concerned that Congress needs to take seriously. We need our banking system to be safe and secure. There are very few off atty banks though, that are similarly situated to Silicon Valley Bank. Number one. It was almost exclusively big tech and venture capital companies that were deposits in Silicon Valley Bank. And the way Silicon Valley Bank would work is they'd they'd bank a big venture capital firm, and the VC firm would require that all their portfolio companies. So a venture capital firm is a firm that takes investments from individuals and institutions and then invest typically in the tech space early stage and startup companies, and so a VC firm could have dozens or even hundreds of tech startups that it's invested in, and many of the vcs would require every one of the tech startups that had they had to bank at Silicon Valley Bank, and so you ended up having a very high concentration. That degree of sector exposure makes a bank quite vulnerable, that it was so intertwined with tech that tech has been hard hit lately, and in particular the high interest rates. Much when you look at startups, they are often heavily funded by debt, and a startup it could often be a pretty long ramp up before they have significant revenue. And so Silicon Valley Bank had greater exposure because they were so sector concentrated in one area. Number One. Number two the fact that ninety six percent of their deposits were uninsured. That is an unusually high number that they were not their business was not having lots and lots of depositors under the FDIC insurance camp. It wasn't a lot of mom and pops. It was big firms with hundreds of millions or billions of dollars and number three. As I mentioned, they had the highest securities portfolio as a percentage of total assets of any bank, and so that they ended up with their investment strategy, they were particularly vulnerable to this interest rate risk. As I mentioned, for a year they didn't even have a risk officer. They didn't hedge significantly against this risk, and so their behavior invited this. Now there is a risk of other, particularly midsize banks, facing a run on the bank, and so we don't want that any any bank is potentially vulnerable to a run on the bank. We want people to have confidence in our banking system. But you asked about the moral hazard. Will others behave recklessly because of this? And I think the odds are are quite high now. A second element that was created is what's called a FED Emergency Lending Facility. It's also known as a thirteen three facility because that's where the authority appears in the Federal Reserve Act, in which case the Feds said they will loan money for a year to back up long term government debt, and they will value that money not its current market value, but at its original purchase price. That's yet another bailout. I mean, let's let's be clear that that is billions and billions of cash that is on the hook to go out from the FED, and it really is striking. Look, we could have a reasonable public policy debate listening to economist examining what needs to be done to ensure stability in the banking system. But the Biden administration didn't want that that that reasonable debate. It didn't want the input of Congress, it didn't want the public to have any say in it. It just wanted political cronies to make that decision. And I think that is a very dangerous dynamic. Yeah, it is concerning, and it seems like the new policy of the Biden administration is be a woke bank and support an advocat and give donations to woke ideology and we'll back you up no matter what. And if that's what they're going to do for the next two years, that's going to be very concerning. Should be an issue moving into the next presidential election, no doubt about that. I want to talk also about China and really what's happening with climate change and with regulations. There are a couple of different Biden administration clips that have emerged recently highlighting just how much the Democrats are in bed and idolizing the Chinese Communist Party. These were moments that when you hear them, you're kind of in shock because you've got the Biden administration officials who are actually saying that they think China is amazing. You have Jennifer Granholm, you also have another individual with a Biden administration and here's a montage of what they've been saying. We're hopeful that, you know, we can all learn from what China is doing. But the amount of money that they're investing in clean energy is actually you know, encouraging. This isn't about decoupling. Now, that's not the only Democrats that seem to be idolizing the Biden at ministration or excuse me, China from the Biden team, you have former Speaker of the House Nancy Pelosi, who also came out saying this about China. But here's the thing. You can't just go after China with a cudgel. You have to say, we have to live on this planet together. How can we work together to save the planet from climate change? They're essential in that discussion. How can we try to work together with them on issues where we can find common ground center China. Just so people understand this, they're one of the biggest, if not one of the biggest, polluting industrialization in the world. They don't ever play by the rules that we are that these Democrats are trying to force us to play by. And not only are the Chinese laughing at us on all of our global warming issues that are just stifling our economy and manufacturing, but they're making money off of these bad policies and polluting at record levels that we've never seen before, and now you've got Democrats praising them. You know, it really is striking that in the same week that the Biden administration does a bailout for their politically connected friends in tech, including billions of dollars of a bailout for Chinese tech companies and Chinese investors, that you have a coordinated pivot from the Democrats to embrace China. Those three clips you played, the first one was from Jennifer Granham, the Energy Secretary, the second one was from Gina Raimondo, the Commerce Secretary, and the third one was from Nancy Pelosi, the former Speaker of the House. All of them are saying almost exactly the same thing. They're all saying we've got to work with China as our partner in fighting climate change. Now, those are the talking points, and I will give Democrats credit. Democrats have incredible message discipline. The fact that you see all three of them saying almost word for word the same thing is clear. They got a message. They're sticking to it. It just so happens the message is laughably absurd. So never mind all the human rights abuses, the torture, the murder, the genocide, the concentration camps. Never mind the culpability for COVID and millions of lives lost and trillions in damage done to the global economy. Never mind the intellectual property theft that China pursues as a business as a state policy. Set all that aside, just focus on the environment. Communist China is the single biggest polluter on the face of the planet, year after year after year. It's the biggest pollution pollutor on the face of the planet. But wait, pen, you might say, Nancy Pelosi just says they're doing great things on the environment. Let me read you an amazing statistic. China right now is in the process of building more new coal capacity than all of the existing US coal plants combined. I want you to pause and think about that for a second. So US capacity right now, we have one hundred and ninety eight gigawatts of coal fired electricity generation capacity. That's of the end of twenty twenty two, one hundred and ninety eight gigawatts. How much do you think China is building, has planned, and is building right now, No clue. So it has one hundred and fifteen gigawatts under construction, and it has another two hundred and fifty gigawatts plant and so all told, that is three hundred and sixty five It is nearly double the current US capacity. That's what they are building and planning right now. And these plants are designed to last forty years or longer. And so to watch the Democrats pivot in, Look, this has nothing to do with the environment. We've talked before about how today's Democrat party is structurally pro China. Why because they're major stakeholders, big tech, big business, big university's, big Hollywood, all of them are in bed with China. And so when you have Pelosi in the Democrats reading the CCP's talking points about how great they are on the environment, it is both deeply dishonest and laughably absurd. One other thing on China. You look at this moment and in history, I think this is going to go down as an extremely pivotal moment because it's not just this administration basically fan boing over China and rewriting history of what China's doing on climate change, but they're also allowing for China to really take advantage of what's happening with Russia and Ukraine. You can bine these two things together on top of what they're doing with TikTok and spying, and what they've been able to do with just stealing anything they can get their hands on through hacking in this country and stealing trade secrets. The list goes on and on. Before we go through that, I want to tell people about Patriot Mobile real quick. Patriot Mobile is the only Christian conservative cell phone company in the US. And if you're sick and tired of what companies that you pay money to every month and then they actually go against your values, You've got an option now in the cell phone industry. 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This administration so far and correct me if I'm wrong, has still to date not one time stood up to China on any significant issue. I would even say probably any basic issue. What is the reasoning behind them being so obsessed with allowing China to just continue to grow, do whatever they want to do and putting American second to China in this policy? Well, Number one that's been Joe Biden's policy his entire life. He has been an advocate on behalf of China for decades. If you remember the video of him saying, come on man, China's our friend, Come on man. He has been arguing that for a long time. Number two, by the way, he's also been perfectly happy to be personally enriched and for his family to be personally enriched, because, as we've talked about at length on this podcast, Hunter Biden made millions of dollars monetizing his father's political connections, and that included, as we know from the Hunter Biden laptop, ten percent for the big guy, for Joe Biden himself. So he's had a personal financial stake in doing business with China for a long time. But number three is the structural reality of the Democrat Party today. They're not willing to stand up to China because the people who fund them depend upon China. The people who form the core of the Democrat Party today are deeply intertwined with China, and actually the Silicon Valley Bank situation illustrates that perfectly. Biden was all too eager to bail out his buddies in tech, but in doing so, he's providing billions and bailouts for China as well, and that's because the two are deeply intertwined. I'll point out on top of that, if you say, well, we'll wait a second. You know, isn't that an exaggeration. In the last Congress, I forced to vote on the Senate floor on my amendment that said the federal government should be prohibited from buying electric vehicles or batteries manufactured using slave labor in concentration camps and China. You would think this would be an easy vote. You would think this would be one hundred and nothing. Every single Democrat except one, Every Democrat except Joe Mansion voted no. And that is a structural dynamic of how today's Democrat Party is organized. Yeah, it's certainly not looking out for the American people first and foremost, and we're seeing that. Whether it's the bank, whether it's China, whether it's climate change. The list goes on and on. Senator, Always a pleasure. Don't forget if you're listening. We do this show three days a week, so make sure you have that subscribe and or the auto download button so you get each and every episode. When we're dealing with what's really happening in Washington, with what's happening with the banks right now. You won't get this anywhere else, so makes you subscribe, Hit that auto download button and rute us to five story review. It helps us reach a lot of new listeners. When you do that, it matters a whole lot and how they rate podcasts. 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