There’s not much mystery about what caused Silicon Valley Bank (SVB) to fail. As The Washington Post’s Julian Mark reported, the bank held a high percentage of government bonds that plunged in value as the Federal Reserve increased interest rates. An announcement that the bank was trying to raise money sparked a run from depositors looking to withdraw their money. The bank collapsed.
Or, as any number of right-wing figures would summarize it: The bank was too “woke.”
If you’re curious how the first paragraph relates to the second, the explanation is simple. In recent months, there has been increased scrutiny among prominent Republicans and figures in the right-wing media of corporate initiatives focused on diversity and equality. If you’ve tracked the right’s obsession with “critical race theory” over the past few years, in which an academic term became a catchall for a wide range of complaints about efforts to recognize America’s demographic diversity, understand that the pattern here is the same.
The difference lies only in “critical race theory” being a purported philosophy and diversity efforts, often shorthanded as DEI (diversity, equity and inclusion), being the theoretical implementation of that philosophy. Like the presentation of “critical race theory” or, say, government-funded research, lots of odd-seeming DEI efforts can be nutpicked to cast a pall on the whole idea.
So, for example, we had Florida Gov. Ron DeSantis (R), as attuned and responsive to the fevers of the right wing as anyone, embarking on an effort to uproot DEI from universities in his state. Since Republicans tend to be older and, therefore, Whiter — and since so many on the right have worked so hard to cast White Americans as under threat from a more-diverse population — DeSantis understands that isolating DEI as a point of opposition is a way to highlight racial insecurity while framing it as a rational response to overwrought leftists.
Remember, too, that the right’s relationship with business has shifted. Particularly since 2020, businesses eager to retain a young, diverse workforce have been responsive to calls to demonstrate empathy with causes important to those workers. The shift of college-educated Americans to the left has also been reflected in corporate offices, leading to a more open embrace among executives of things like diversity.
It’s perfectly obvious why Silicon Valley Bank considered diversity a corporate value. It’s a regional bank in a heavily Democratic, diverse, socially liberal region. The bank, looking to build relationships as broadly as possible in the region, publicly supported efforts that reflected the community’s values.
That has now become a point of attack.
Charlie Kirk, head of the right-wing organization Turning Point USA, offered a particularly lazy explanation for the bank’s failure.
It is a mystery why Silicon Valley Bank collapsed. pic.twitter.com/7nvUi7IJT2— Charlie Kirk (@charliekirk11) March 10, 2023
There’s no argument here, just an assertion that because the regional bank considered issues of diversity in a diverse region, it failed.
To be fair, that draws a less cringey line between diversity and the bank’s collapse than the one offered by the Wall Street Journal’s Andy Kessler, who has written that he lives in a high-income neighborhood on the San Francisco Peninsula.
“In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have ‘1 Black,’ ‘1 LGBTQ+’ and ‘2 Veterans,’ ” he wrote in his column for the paper. “I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.”
You’ll recall that racial homogeneity didn’t help keep major financial institutions from failing in the run-up to the financial crisis 15 years ago. Kessler doesn’t offer any explanation for how these “diversity demands” — itself a poorly coded argument that the board members were somehow inferior — contributed to bad decision-making. It, like Kirk’s tweet, is just a shrugging effort to ding DEI for being associated obliquely with an unrelated failure.
One of the central targets of the right after the collapse was an executive named Jay Ersapah. The Daily Mail showed a picture of Ersapah over the block headline “GO WOKE, GO BROKE.”
Woke head of 'risk assessment' at Silicon Valley Bank 'prioritized' LGBT initiatives https://t.co/WfPQ1NMf0W pic.twitter.com/mYmdJgnKBj— Daily Mail US (@DailyMail) March 11, 2023
Donald Trump Jr. shared a tweet similarly targeting Ersapah, declaring that “SVB is what happens when you push a leftist/woke ideology and have that take precedent over common sense business practices.”
Unfortunately for this narrative, Ersapah was based in Britain, not the United States. There’s no reason to think that she had any role in the bank’s failure at all.
Not that this dissuaded the New York Post.
“Her efforts as the company’s European LGBTQIA+ Employee Resource Group co-chair earned her a spot on SVB’s ‘outstanding LGBT+ Role Model Lists 2022,’ ” it wrote, “a list shared in a company post just four months before the bank was shut down by federal authorities over liquidity fears.”
Just four months! How clear a line needs to be drawn here?
On Maria Bartiromo’s Sunday Fox News show, Rep. James Comer (R-Ky.) and DeSantis both suggested that somehow diversity issues hobbled the bank.
“It appears to me, this bank, they’re so concerned with DEI and politics and all kinds of stuff,” he said, “I think that really diverted from them focusing on their core mission.”
A lackadaisical tossing of a dart at a big board that says “diversity.”
These claims collapse under any light scrutiny. What, the board was about to hire a White guy whose background was in not over-investing securities that would be a liability in the event interest rates rose but, at the last moment, they decided they needed one more veteran instead? Or did Ersapah’s inclusion on a global list of LGBTQ role models captivate her colleagues so fully that they failed to notice the Fed’s rate hikes? Maybe there was an email that was supposed to go out about Fed Chairman Jerome H. Powell’s assessment of rates, but top executives thought it was more important to send around a sign-up for a Black History Month potluck. If you use your imagination, anything is possible.
Again, why SVB failed is clear. Just as clear is why right-wing actors want to pretend that the failure resulted downstream from diversity: because they know that diversity is something their customers, voters and audiences detest and that those audiences won’t apply any more scrutiny to the argument than did Andy Kessler.
“Go woke, go broke” is the starting place, not the conclusion.