Ross: DeSantis is wrong, diversity isn’t the reason the banks failed

Mar 13, 2023, 8:05 AM | Updated: Mar 14, 2023, 8:48 am
A Silicon Valley Bank sign is shown at the company's headquarters in Santa Clara, Calif., Friday, March 10, 2023. The Federal Deposit Insurance Corporation is seizing the assets of Silicon Valley Bank, marking the largest bank failure since Washington Mutual during the height of the 2008 financial crisis. The FDIC ordered the closure of Silicon Valley Bank and immediately took position of all deposits at the bank Friday. (AP Photo/Jeff Chiu)
(AP Photo/Jeff Chiu)

There are a number of theories about why the Silicon Valley Bank failed. The easiest theory to understand came from Presidential candidate Ron DeSantis.

“It appears to me, I mean this bank, they’re so concerned with DEI and politics and all kinds of stuff I think that really diverted from them focusing on their core mission,” DeSantis said.

More from Dave Ross: The assault weapons ban in the words of the legislators

DEI being Diversity, Equity, and Inclusion. He didn’t go into details, so we’ll have to try to figure it out for ourselves.

Could it be the bank’s diversity training sessions traumatized management into not keeping enough cash reserves on hand? DeSantis didn’t say, but in case that explanation didn’t fly, he had a backup explanation:

“I also look at it and say we have such a morass of federal regulations, we have a massive federal bureaucracy, and yet they never seem to be able to be there when we need them to be able to prevent something like this,” DeSantis said.

And he got that exactly right! Because there are a lot of federal bank regulations which are supposed to prevent this. One of the toughest regulations was passed in 2010. It was called the Dodd-Frank Act. It was a reaction to the financial catastrophe of 2008. And Dodd-Frank required banks large and small to keep enough cash reserves to prevent the exact problem Silicon Valley Bank faced last week.

But here’s the kicker: in 2018, Silicon Valley Bank vigorously lobbied to change those regulations to exempt itself –and other smaller banks– from having to keep those higher reserves.

And they won. Congress changed the rules, and the President went along.

“The legislation I’m signing today rolls back the crippling Dodd-Frank regulations that are crushing community banks,” Trump said as he signed the legislation. “As a candidate, I pledge that we would rescue these community banks from the disaster of Dodd-Frank. And now we are keeping that commitment”

This bit of history prompted the Fox Headline “Liberals blame Trump for Silicon Valley Bank collapse.”

And they have a point – liberals blame Trump for everything, the way conservatives blame ‘wokeness’ for everything. But there was an article in Forbes Magazine that seemed to back the liberals this time: “How Trump’s Deregulation Sowed The Seeds For Silicon Valley Bank’s Demise.

And the article explains that because of the 2018 de-regulation, smaller banks like SVB didn’t even have to conduct stress tests to see if they were vulnerable!

I’m not sure whose explanation is correct here – but what I do know is that in business stories like this, the facts tend to be complicated and fiercely boring.

And knowing that, Ron DeSantis gave his audience what they wanted, skipped the boring parts, and blamed it on diversity.

Listen to Seattle’s Morning News with Dave Ross and Colleen O’Brien weekday mornings from 5 – 9 a.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

Dave Ross on KIRO Newsradio 97.3 FM
  • listen to dave rossTune in to KIRO Newsradio weekdays at 5am for Dave Ross on Seattle's Morning News.

Dave's Commentary

KIRO Newsradio Opinion

Light rail transit fare...
Dave Ross

Ross: You have to pay your transit fare now; imagine that

Starting this week, new signs are going up at all the light rail stations.  They are bright yellow signs that say “Pay To Enter.”
9 hours ago
light rail, Sound Transit...
Dave Ross

Ross: Ex-football players would convince people to pay for transit

Yesterday, the State Supreme Court ruled in favor of Zachary Meredith, who in 2018 boarded a Community Transit bus without paying his fare.
3 days ago
vaccine mandate policing...
Dave Ross

Ross: Community policing program should include public tackle training

There would be five or ten of our burliest male and female citizens trained to swarm the assailant and, in 30 seconds, have him zip-tied
4 days ago
airline fees...
Gee Scott and Ursula Reutin Show

Gee & Ursula: What about those airline fees?

What about those airline fees? More are coming. KIRO Newsradio's Gee & Ursula have different takes on the subject.
5 days ago
John Curley and Shari Elliker

John and Shari: Are clowns scary?

Join John Curley and Shari Eliker in discussing whether or not clowns are scary. John is prepared to tricycle furiously to the defense of the clown community.
5 days ago
Dave Ross

Ross: The myth of pulling yourself up by your bootstraps

A lot of us take that to the extreme by assuming everyone has those magical bootstraps that, if only you pull on them hard enough, will fix everything
5 days ago

Sponsored Articles

SHIBA volunteer...

Volunteer to help people understand their Medicare options!

If you’re retired or getting ready to retire and looking for new ways to stay active, becoming a SHIBA volunteer could be for you!
safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Ross: DeSantis is wrong, diversity isn’t the reason the banks failed