Bank Crash Aftermaths & Animals Take On Havana Syndrome
March 14, 2023
Just The Right Size To Fail
It’s been a bad couple of days for bankers on both coasts. Last Friday, California’s Silicon Valley Bank (SVB) shut down after its weakened financial position became public knowledge. Soon after the Federal Deposit Insurance Corporation (FDIC) took over SVB, New York financial regulators took over NYC-based Signature Bank, which also went belly-up following an avalanche of withdrawals from customers worried by SVB’s failure.
Both banks were relatively mid-sized. SVB had $212 billion in assets, and Signature had $110.4 billion at the end of 2022. SVB mainly provided its services to the Silicon Valley tech scene, where a large portion of depositors had more than the FDIC-insured maximum level of $250,000. Signature lent its services to cash-flush New York law and real estate firms – almost 90% of its $88 billion in deposits were not insured by the FDIC at the end of 2022.
So, what went wrong? At SVB, the bank spent most of its deposits buying chunks of long-term debt including Treasury bonds. While interest rates remained low, those investments were solid. But when the Fed upped interest rates in the face of rising inflation, the bonds became less optimal. That combined with venture capital cash drying up, causing many of its startup clients to take money from their accounts. Before the collapse, the bank was forced to sell many of its assets at a loss in order to pay out depositors.
Last Wednesday, SVB revealed its losses to customers but told them to “stay calm” in order to keep it from collapsing. Somehow that didn’t work, and the bank was forced to sell itself to the FDIC following a bank run in order to pay out its customers. Signature’s collapse was caused in part by worries over SVB’s closure, as well as the recent crash of the crypto market. The bank was one of few in the U.S. that allowed customers to deposit their crypto coins, damaging the business when FTX went down late last year.
While stocks of other midsize banks have taken a tumble due to the news, the situation is different from the 2008 financial crisis. The two banks were in a unique situation due to their largely-uninsured depositors, and Sunday’s announcement of Washington’s takeover of the banks noted it will only pay out depositors, not investors.
Want To Know More?
- Elizabeth Warren: Silicon Valley Bank Is Gone. We Know Who Is Responsible. (NYT, $)
- ‘Absolutely idiotic’. SVB insider says employees are angry with CEO (CNN)
- How the collapse of Silicon Valley Bank affected one startup (NPR)
- J.P. Morgan, PNC among suitors for SVB holding company (Axios)
- The Wall Street Journal Goes Full White Supremacist, Blames Silicon Valley Bank Collapse on “1 Black” and “1 LGBTQ+” (Vanity Fair)
Some Good News
- Illinois enacts mandatory paid leave ‘for any reason’ (AP)
- Scientists find a way to suck up carbon pollution, turn it into baking soda and store it in the oceans (CNN)
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A U.S.-Spec Yellow (Nuclear) Submarine
- The U.S. is once again upping the anti-China ante, this time by sharing its nuclear submarine technology with Britain and Australia, two key allies in the effort to curb China’s expansion in the Asia-Pacific region. The technology exchange marks the first time in 65 years that the U.S. will share the inner makings of its nuclear submarine fleet.
- Australia is expected to buy multiple U.S. nuclear subs and will develop its own fleet using a version of their technology. British Prime Minister Rishi Sunak cited “Russia’s illegal invasion of Ukraine, China’s growing assertiveness, the destabilizing behavior of Iran and North Korea” as the main factors pushing the pact.
They’re Building A Wall, Too!
- As the U.S. arms its allies against China, Beijing is crafting a response. In his first speech since being confirmed for a record third term as China’s leader last Friday, Xi Jinping highlighted his country’s strategy going forward, including a renewed focus on building up China’s military and technological independence.
- Xi promised to “build the military into a great wall of steel that effectively safeguards national sovereignty, security and our development interests,” declaring that “safety is the foundation of development, and stability is the prerequisite for prosperity.” He also focused on building China’s domestic tech industries, stating that Chinese companies must “play a greater role in promoting self-reliance and self-improvement in science and technology” in opposition to U.S. “containment and suppression.”
Additional World News
- The Ukraine war is changing how the Pentagon buys weapons (Politico)
- British PM Rishi Sunak says China is a ‘systemic challenge’ to the world order (NBC)
- Head of global trade union body sacked after donation investigation (Guardian)
- Rohingya camp fire was ‘planned sabotage’ – investigators (BBC)
- UK: Tens of thousands of doctors kick off 3-day strike (AP)
- Masks stay put in Japan even as 3-year request to wear them ends (NBC)
- Death toll climbs as Cyclone Freddy slams Malawi, Mozambique (AP)
“The safe way to double your money is to fold it over once and put it in your pocket.” – Kin Hubbard
Greasing The Wheels For More Climate Damage
- While this news certainly won’t come as a surprise, the Biden administration approved the massive Willow oil project in Alaska on Monday. The news is likely to devastate environmental activists and local tribal communities alike.
- The decision allows ConocoPhillips to develop three drilling sites at its proposed Willow project on federal land in the National Petroleum Reserve-Alaska. It’s smaller than requested, but the company says it’s still plenty of space for their decidedly not-green project to move forward.
- The project will include up to 199 oil and gas wells on three separate sites, two wells to inject wastewater, pipelines, a new gravel mine, and roads and other infrastructure. Willow is expected to eventually produce up to 180,000 barrels a day of oil and around 280 million tons a year of greenhouse gases over its expected 30-year lifetime
Havana Hard Time Trusting The President
- You may remember Havana Syndrome, the mysterious illness that mostly affected government officials and nobody ever really solved its origin (more on this below). Unsurprisingly, Russia was at the top of the suspects list. However, John Bolton, former President Trump’s third national security adviser, decided that he wouldn’t share his concerns with his boss.
- Bolton appeared on an episode of a podcast, The Sound: Mystery of Havana Syndrome, which was released on Monday. “Since our concern was that one of the perpetrators – maybe the perpetrator – was Russia,” Bolton said, “we didn’t feel we would get support from President Trump if we said, ‘We think the Russians are coming after American personnel.’”
- Bolton’s tenure ran from April 2018 to September 2019, right through special counsel Robert Mueller’s investigation of Russian election interference. Trump’s perceived relationship with Russia was, clearly, enough of a concern that his own national security adviser didn’t feel he could remain objective.
Additional USA News
- Transgender sports restrictions advance on a national level (Politico)
- Coast Guard suspends search for migrants after two smuggling boats are found capsized along San Diego coast, leaving 8 dead (CNN)
- Three-year-old girl accidentally shoots sister, 4, dead in Texas (Guardian)
- Arrest warrant issued after Roy McGrath, ex-chief of staff to former Gov. Hogan (CBS)
- Biden wants $886 billion defense budget with eyes on Ukraine and future wars (Reuters)
- Treacherous flooding is about to get worse in California as another atmospheric river closes in on storm-battered residents (CNN)
- Vice President Kamala Harris to visit Africa later this month (CNN)
Ferreting Out The Culprit
- The intelligence community is having a hard time letting go. Last month, five different U.S. intelligence agencies declared that it was “very unlikely” that a foreign actor wielding a mysterious energy weapon was behind the phenomenon known as “Havana Syndrome.” Despite this, the Department of Defense has invested even more money into researching the cause of “anomalous health incidents,” which mysteriously only affect U.S. intelligence and diplomatic personnel abroad.
- According to five sources familiar with the subject, the Pentagon has continued to invest money and personnel into a search for a weapon that could have caused Havana Syndrome, while also spending money to develop defenses against the totally-real ailment. Some of the research involves shooting up different types of animals with different types of radio weapons in the hopes that they’ll eventually show some form of brain damage.
- A different set of sources outlines these animal tests. One set of experiments involves researchers beaming primates with different radio frequencies in order to induce the infamous “anomalous health incidents.” Another set of tests, for which the Defense Department shelled out $750,000, will expose 48 ferrets to radio waves for two hours a day over 60 days. One former DoD official says that more tests on different animals are on the way. Hide your dogs, hide your cats, and hide your fish because they’re beaming radio waves at everyone out here.
Additional Reads
- US government ponders the meaning of race and ethnicity (AP)
- The continuing discoveries at Pompeii (CBS)
- Remains of Roman aristocrat unearthed in ‘extraordinary’ cemetery near Leeds (Guardian)
- Iwao Hakamada: Japan retrial for world’s longest-serving death row inmate (BBC)
- Custom AI chatbots are quietly becoming the next big thing in fandom (The Verge)
- TikTok users shrug at China fears: ‘It’s hard to care’ (BBC)
- A giant seaweed bloom that can be seen from space threatens beaches in Florida and Mexico (NBC)