SVB Was Killed by Incompetence and Showiness, Not Wokeness

Numerous conservatives claim the failure of Silicon Valley Bank, the U.S.’s 16th-largest bank, is a result of its woke policies, laying bare the realities of putting social policy above sound business judgment. Progressives claim SVB’s failure is the result of Trump-era bank deregulation. Both are wrong, though there is a cousin to wokeness lurking in SVB’s failure. We used to call that cousin the “cool factor.”

Advancing the theory that SVB’s failure is caused by wokeness, a Fox Business report last week pointed to its public commitment to DEI (diversity, equity, and inclusion), August 2022 statement that two-thirds of its workforce meet diversity criteria, and Claremont Institute data for the proposition that the bank donated $73,450,000 to social-justice causes. In fact, the Claremont estimate consists largely of loans and investments in businesses that comply with SVB’s ESG criteria. There is no evidence that those loans or investments contributed to SVB’s failure.

In 2021, SVB announced its five-year Community Benefits Plan to lend $5 billion to small businesses, allocate $4.8 billion in Community Reinvestment Act loans and investments, extend $1.3 billion in residential mortgages to low- to moderate-income (LMI) borrowers and borrowers in LMI census tracts, and make $75 million in charitable contributions.