Economics: What We Could Learn From The Silicon Valley Bank Crash

 (Drivebycuriosity) - The meltdown of the Silicon Valley Bank made a lot of noise. The second largest bank crash in decades.

SVB was not your grandfather´s kind of bank. SVB was a woke bank. Traditionally corporations, including banks, aim to maximize their profits. Not the SVB. The bank followed the ESG goals: Environment, Social Issues & Governance. "We work holistically across SVB and with our stakeholders to continue to enhance our ESG initiatives" ( svb.com)

 

 (  svb.com/about-us/)

( source)

What could one expect when a bank shuns profit maximizing and replaces it with a "philantrophy pledge"?

What could one expect when a bank does not want to use her profits to build up reserves and instead donates AT LEAST one percent of its net income for charitable causes annually?

What could one expect when the staff of the bank is chosen by criteria of "equality & diversity" instead of qualification (merits)?

 

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The SVB crash shows what you get when you replace profit maximizing and solid finance management by stakeholder capitalism and ESG. Commenters lament that the bank was surprised by the Federal Reserve interest rate hikes (netinterest). But wasn´t that every bank? 

SVB`s woke banking and following crash reminds me of Bankman-Fried`s Effective Altruism, being now a case for the courts.

SVB could have been a fantasy of Ayn Rand and been a part Atlas Shrugged (driveby ).

Go woke, go broke