What Is Silicon Valley Bank, and Why Is It Collapsing?

Silicon Valley Bank, a major lender for tech startups, was shut down Friday by California regulators.

SVB was struggling to raise enough funds to offset a nearly $2 billion loss on bond sales. Customers worried that the bank would collapse entirely and rushed to withdraw their funds, further destabilizing it.

The California Department of Financial Protection and Innovation swooped in and closed the bank Friday morning, putting the Federal Deposit Insurance Corporation, or FDIC, in charge of SVB’s assets.

The FDIC announced that SVB’s branches will reopen Monday, and insured customers will be able to access their deposits then.

Here is a look at what happened to Silicon Valley Bank.

1. What is Silicon Valley Bank?

Silicon Valley Bank is the sixteenth-largest bank in the United States. It primarily operates in Northern California and thus is relatively unknown outside of Silicon Valley.

However, the bank partnered with nearly half of all venture-backed technology and life sciences companies in the U.S. Silicon Valley Bank lent to higher-risk startups that have taken a hit from the Federal Reserve’s high interest rates as well as decreasing venture capital investment.

2. What went wrong?

Silicon Valley Bank announced Wednesday evening that it needed to raise more than $2 billion. It outlined a plan to do so that included selling $1.25 billion in common stock, which are shares that give holders voting rights, and $500 million in convertible preferred shares, which do not give the holder voting rights.

SVB also said that investment firm General Atlantic had agreed to a deal to sell $500 million in common stock.

But SVB’s customers were apparently not appeased by the plan, and the bank’s stock value has plummeted at least 60 percent since then.

3. What caused the collapse?

The Fed has hiked interest rates aggressively over the past year to try to bring down record-high inflation. The higher rates caused venture capital investments to shrink, while the bank’s clients used up cash much faster than before due to price increases. As a result, SVB’s startup customers had far less money to deposit.

To make up for its cash losses, SVB sold $21 billion in securities—but at a $1.8 billion loss, prompting the plan to sell off shares and stabilize itself with the new funds.

Instead, investors panicked and began withdrawing their money from the bank. This created a vicious feedback loop, where the bank appeared increasingly unstable and unsustainable, prompting more customers to take out their money.

4. What was the bank trying to do?

SVB was in talks to sell itself, right up until regulators took over, after its attempts to raise more cash failed. Several large financial institutions were reportedly considering purchasing the bank.

But because so much money was flowing out as customers withdrew their funds, it was difficult to assess SVB’s value anymore, making it less appealing to any potential buyers.

5. Why is this important?

Investors are worried that SVB’s troubles are a bellwether of what is to come for the rest of Silicon Valley, and the financial sector at large. The day before SVB announced its fundraising plan, cryptocurrency lender Silvergate Capital Corp said it would be shutting down, rattling the market. Shares in other banks fell Thursday as concerns over SVB grew.

The high interest rates mean that other banks that attempt to sell off bonds to make fast cash will be forced to do so at a loss, like SVB, according to Bloomberg. If customers get nervous, banks will have to compete harder to keep them, for instance by offering higher interest rates on savings. Doing that will chip away at what the banks are able to earn for themselves.

Things will be particularly difficult for small and midsize banks, Bloomberg noted. Those institutions don’t have as many funding flows, meaning they would have to sell more stock and take more hits.

A federal judge ruled Friday that the infamous Access Hollywood tape in which Donald Trump bragged about groping women without their consent can be used as evidence in the defamation trial brought by a woman accusing him of rape.

Writer E. Jean Carroll is suing Trump for defamation and sexual assault. Trump has rejected the rape allegation and repeatedly argued that the 2005 recording of him was just “locker-room talk,” and thus irrelevant to the case.

But Judge Lewis Kaplan determined otherwise. “In this case, a jury reasonably could find, even from the Access Hollywood tape alone, that Mr. Trump admitted in the Access Hollywood tape that he in fact has had contact with women’s genitalia in the past without their consent, or that he had attempted to do so,” he wrote in his decision.

Kaplan also ruled that testimony from two other women who accuse Trump of sexually assaulting them can be introduced as evidence in the trial. “Most of the evidence that Mr. Trump seeks to keep from the trial jury is to the effect that Mr. Trump allegedly has abused or attempted to abuse women other than Ms. Carroll in ways that are comparable to what he allegedly did to Ms. Carroll,” he wrote in his decision. “In other words, Ms. Carroll offers evidence to show that Mr. Trump has a propensity for such behavior.”

Carroll accused Trump in her 2019 memoir of raping her in the Manhattan Bergdorf Goodman department store in the mid-1990s. She has sued him twice for defamation: first in 2019, when he said she made up the rape allegation to promote her book, and again in November for posts he made about her on social media. She isn’t alone: At least 26 women have accused Trump of sexual harassment or assault since the 1970s, all of which he has denied.

The Access Hollywood tape, from a 2005 taping of the show, caught Trump on a hot mic saying, “When you’re a star, they let you do it. You can do anything. Grab ’em by the pussy.” It became public in 2016, just days before his second debate against Democratic presidential nominee Hillary Clinton.

Now, it seems, Trump will soon have to hear the tape replayed to him in court. Kaplan has set the trial date for April 25.

Finally, after decades, the law might be catching up with Donald Trump. The invitation to him to testify next week from Manhattan District Attorney Alvin Bragg signals, according to many reports, that Bragg’s investigation into the Stormy Daniels matter is winding down and that an indictment of Trump may be imminent. The indictment would be for breaking election and business record laws by allegedly paying $130,000 in hush money to Daniels and subsequently covering it up.

Not his biggest crime, by a long shot. I’d rank it about fifth at best (fomenting an insurrection, accepting foreign help during a campaign, ordering a state official to “find” 11,780 votes, all the tax stuff over many decades, for starters). But even so, a felony.

Trump denies it, of course. He claims he had no interest in Stormy Daniels (whom he refers to as “Horseface”). It’s all a “Witch-Hunt,” like all the other hoaxes. His statement mentioned George Soros, the “Radical Left media,” Hunter Biden, and violent crime (although not the violent crimes allegedly committed by him, as in against his first wife and E. Jean Carroll).

The law grinds slowly. Politics, however, like Niagara Falls, never stops. So what are the politics of this? It likely has a marginally positive impact for Trump in a GOP presidential primary. It gives him another target, something else to whine about. I doubt his opponents will really be able to attack him over it; they’ll just sound like they’re defending the corrupt, Soros-backed, radical-left deep state.

One little-examined question, however, is whether an indicted Trump draws an anti-Trump Republican primary vote to the polls. For example, there are about 5.3 million registered Republicans in Florida. In the 2016 primary (the most recent competitive one), about 2.3 million people voted. That’s not bad, for a primary. Still, it means 57 percent of Republicans didn’t vote, and we can reasonably assume, because all the political science says so, that the primary voters were more extreme ideologically than nonvoters. So if half a million or so less-MAGA-oriented Republicans come out in a primary to vote against Trump, he loses. He maybe loses in that state to Ron DeSantis anyway, but the basic formula repeats elsewhere.

Anyway. Just reading his crazy statement is a chilling reminder of what life was like when we had to pay attention to that maniac every day. He’s just the most poisonous person ever. What a joyous day it would be if he were actually hauled off to a jail cell.

Not even a full day after the Senate overwhelmingly voted to overturn Washington, D.C.’s criminal code updates, Republicans are now pushing for D.C. officers to be able to put people in chokeholds and more easily hide their body camera footage.

Republican Representatives Andrew Clyde and Andrew Garbarino introduced a House resolution Thursday targeting criminal justice and policing reforms made in the aftermath of a string of police killings, including the deaths of George Floyd and Breonna Taylor.

The duo is specifically targeting D.C.’s Comprehensive Policing and Justice Reform Emergency Amendment Act of 2022, Axios reports. The D.C. legislation, which passed the City Council last year but is now being reviewed by Congress, enacts an array of reforms, such as outlawing the use of neck restraints, like that used by Minneapolis Police Officer Derek Chauvin to kill Floyd in May 2020. The bill also calls to make body camera footage of officer-caused deaths or serious uses of officer force more accessible to the public.

The D.C. legislation also seeks to expand membership and inclusion on governing bodies like the Police Complaints Board and Use of Force Review Board. It would also ban employment of new officers if they were previously determined by agencies to have committed serious misconduct or to have been forced out of previous roles for “disciplinary reasons.”

Some of the policies, like banning police neck restraints, had been enacted through temporary legislation since the summer of 2020. But all these were to be codified by the  broader reform package that Republicans are now vying to overturn. Axios reports that the resolution to overturn such baseline reforms already has 15 co-sponsors.

While this new GOP effort in favor of chokeholds and against democratically approved reforms may seem particularly brazen, it’s clearly about momentum. Just yesterday, a successful right-wing-driven campaign against D.C. updating its 100-year-old criminal codes led to 81 senators voting to overrule the criminal code updates.

The updated criminal codes were even more modest than the police reforms now being challenged; they mainly dusted off archaic standards and effectively made it easier for courts to prosecute crimes. But overturning these mild policies clearly emboldened Republicans to go a step further. 

A Republican lawmaker in Texas has introduced a bill to appoint a state special prosecutor to handle abortion law violations, among other issues, The Washington Post’s Caroline Kitchener reported Thursday.

The bill, introduced in the state House of Representatives Wednesday, would let the state Supreme Court appoint a special prosecutor to handle violations of Texas election laws, human trafficking cases, and violations of the state’s abortion laws.

Since Roe v. Wade was overturned, Texas has banned abortion after six weeks, before many people even know they are pregnant. There are no exceptions for rape or incest, and only a few to save the life of the pregnant person. Individuals are also allowed to sue anyone who provides abortion care or helps someone get an abortion, in what’s known as the state’s vigilante law.

But apparently not satisfied with that, Texas Republicans have begun to introduce bill after bill to curb access to abortion, despite the fact that six out of 10 Texas voters say they support abortion in all or most cases.

One lawmaker introduced a bill in February that would compel internet providers in Texas to block websites that sell or provide information on how to obtain abortion pills. Just last week, another official introduced a bill that would ban credit card companies from processing transactions for abortion pills. Both measures are aimed at cutting off a crucial resource in maintaining access to safe abortion.

Texas is not the only state to ignore what constituents actually want when it comes to abortion laws. Georgia Republicans have introduced a bill that would classify abortion as homicide, despite almost two-thirds of Georgia voters already objecting to current abortion restrictions. A Kentucky lawmaker also introduced a bill classifying abortion as homicide, even though the state voted to protect abortion access during the midterm elections.

The most egregious example is Kansas, where residents voted in August to keep abortion protections in the state constitution. Lawmakers responded by introducing legislation that would let individual cities and counties ban the procedure, a blatant attempt to override the will of the people.

Writer Jessica Valenti pointed out that the latest Texas legislation could be how anti-abortion lawmakers make sure their agenda gets carried out. She noted that many district attorneys are refusing to pursue cases that criminalize abortion, so a special prosecutor for abortion law violations would make sure people are punished for getting the procedure.

One such attorney to take a principled stand against abortion prosecutions was Andrew Warren, a state attorney in Florida who had signed a joint statement with other elected prosecutors the day Roe was overturned, stating “our firm belief that prosecutors have a responsibility to refrain from using limited criminal legal system resources to criminalize personal medical decisions,” such as abortion or transgender health care.

Florida Governor Ron DeSantis fired Warren for signing the statement.

President Joe Biden unveiled a $6.8 trillion budget on Thursday that would expand support for poor and middle-class Americans—and tax the rich to help pay for it.

“Folks, let me tell you what I value with the budget I’m releasing today,” he said at an event in Philadelphia. “I value everyone having an even shot. Not just labor, but small-business owners, farmers, so many of the people [who] hold the country together who have been basically invisible for a long time.”

The proposed budget includes hundreds of billions of dollars each for childcare assistance, health coverage assistance, home care for the elderly and disabled, paid leave for workers, free community college and prekindergarten, and homeowners’ and renters’ assistance. The plan is a blueprint of Biden’s priorities as he prepares—presumably—to run for reelection.

Biden said his plan would reduce the federal deficit by $3 trillion over the next 10 years, primarily by increasing taxes on wealthy Americans and corporations. He would also increase payroll and income taxes on single filers who make more than $400,000 a year and raise the corporate tax rate from 21 to 28 percent (in 2017, Donald Trump reduced it from 35 percent).

Biden already previewed another part of the plan earlier this week: extending Medicare into the 2050s, a direct challenge to Republicans who want to slash funding for the program. His budget would let Medicare negotiate prices for a wider range of prescription drugs, an expansion of part of the Inflation Reduction Act. The money saved by negotiating drug prices would then be reinvested in the Medicare trust fund.

The budget would also quadruple a newly implemented tax on corporate stock buybacks and eliminate tax incentives for the oil and gas industry, forcing companies to invest their funds back into the economy, instead of keeping money within their own organizations.

With Republicans in control of the House of Representatives, this budget doesn’t stand a chance of becoming reality. The GOP has made clear they are willing to hold the debt ceiling hostage in order to cut costs in the federal budget—though they have not said exactly how they propose to cut costs. Some Republicans have hinted at cutting Medicare and Social Security, then denied this intent following backlash.

Senator Rick Scott, who came under particular fire from Biden for a proposal to sunset Medicare every five years, immediately criticized the president’s budget.

Biden’s “budget should be a wake-up call for the American people,” the Florida Republican tweeted. “He isn’t concerned about reducing the debt or lowering inflation. He’s focused on throwing money at his woke agenda.”

Democrats, including Biden, have said they refuse to compromise on the debt ceiling, setting up a protracted battle. But if the debate drags out too long, the United States could be in economic peril. The government hit the debt ceiling in January and could default on its debt by the summer if the cap isn’t raised, according to Treasury Secretary Janet Yellen.

Norfolk Southern CEO Alan Shaw told senators Thursday morning that his company is doing “what’s best” for the community of East Palestine in the wake of a disastrous train derailment. Shortly before he began speaking about the company’s renewed commitments to rail safety, another Norfolk Southern train derailed in Alabama.

The morning’s proceedings were the Senate Environment and Public Works Committee’s first hearing on the derailment of a Norfolk Southern train last month that has left people sick, animals dying, and residents wondering if it’s still safe to remain in the place they’ve lived in for generations.

Committee members spent much of their time grilling Shaw on questions ranging from how much support the company will pledge to the community to what it will do to lead the industry away from the kinds of practices that have resulted in disasters like those in East Palestine. Over and over, Shaw promised company support to those affected; over and over, he also demurred on the nitty-gritty questions about exactly how far companies will go to make railroads safer for both workers and the public.

The hearing began with opening remarks from Senators Sherrod Brown, Bob Casey Jr., and J.D. Vance. Casey challenged Shaw to support his bipartisan rail safety bill, which, among other things, calls for stronger safety standards for all trains carrying hazardous materials, expands those standards to trains not deemed “high-hazard,” and calls for a minimum of two-person crews on freight trains.

Brown echoed this suggestion and criticized Norfolk Southern’s adoption of the industry-wide, Wall Street–blessed, precision-scheduled railroading, or PSR, practices.

Precision-scheduled railroading is essentially a series of cost-saving measures, in the name of which rail companies have cut jobs and consolidated dispatch centers, making trains less safe, as fewer workers have less time to manage bigger trains.

Vance was a bit more idiosyncratic with his remarks. On one hand, the senator who likes to position himself as the sage of working-class America denounced some of his Republican colleagues “who seem to think that any public safety enhancements for the rail industry [are] somehow a violation of the free market.” Vance suggested the industry’s exclusive subsidies are already intervening in the free market. “Do we do the bidding of a massive industry that is embedded with big government, or do we do the bidding of the people who elected us to the Senate into the Congress in the first place?” Vance challenged.

On the other hand, Vance still maintained that it wasn’t simply deregulation bought by corporate greed that has led to these disasters. Vance claimed there was a slow response to the crisis in Ohio “because a certain segment of our leadership feels like the people of East Palestine are a little out of style. They have their own politics. They’re a little too rural, maybe a little too white.”

Shaw responded favorably to the idea of reforms but did not explicitly say he supports the entire bipartisan rail safety bill. Throughout the hearing, Shaw repeatedly claimed that Norfolk Southern has a “culture of safety”—one he commits to making better, by working with others to learn from the East Palestine derailment.

For her part, Senator Debbie Stabenow pointed out that at least 20 derailed Norfolk Southern trains had chemical releases; she questioned how Norfolk Southern would be “learning” from this instance if they hadn’t seemed to learn from the previous 20. “I don’t want number 21 in Michigan, or anywhere else for that matter,” she said.

On broader industry trends, Senator Sheldon Whitehouse described how much money the industry has pumped into lobbying for weaker regulation. Whitehouse focused specifically on the industry fighting against the implementation of updated electronic brakes, as opposed to the Civil War–era brakes generally used on freight trains now.

Senator Bernie Sanders asked Shaw point-blank whether the CEO would commit to leading an industry-wide charge to stop the practice of profit-chasing, job-cutting PSR. Shaw insisted the company was on a “hiring spree,” but Sanders pressed, countering that the company was just recouping from previous layoffs. Shaw declined to answer directly, instead saying that he “charted a new course in the industry,” by moving “away from a near-term focus solely on profits” and taking a “longer-term view,” with regard to its workers.

Sanders then brought up paid sick leave, which is still not guaranteed to all rail workers (though companies including Norfolk Southern have begun giving some workers paid sick days, ostensibly to stave off further regulation).

“Senator, I share your focus on our employees. I will commit to continuing to discuss with them important quality of life issues with our local craft colleagues,” Shaw said.

“With all due respect, you sound like a politician,” Sanders responded. “Paid sick days is not a radical concept in the year 2023. I am not hearing you make that commitment to guarantee that to all of your workers. Will you make that commitment, sir?”

Shaw repeated that he would speak to employees about “quality of life issues that are important to them.”

Iowa and Arkansas are the latest red states to pass bills cracking down on gender-affirming care for minors. Both bills are expected to become law.

The Iowa House of Representatives passed a bill Wednesday that would prohibit doctors from giving puberty blockers, hormone therapy, or gender-affirming surgeries to people under age 18. Five Republican lawmakers broke ranks to vote against the bill with Democrats. The measure had passed the Senate along party lines the night before. It now moves to Republican Governor Kim Reynolds, who is expected to sign it into law.

In Arkansas, the House passed a medical malpractice bill that would make it easier for people to sue doctors who give gender-affirming care to minors. Republican Governor Sarah Huckabee Sanders has said she supports the measure.

The bills are part of a much larger wave of state-level legislation targeting LGBTQ people, particularly transgender people. Also in Iowa this week, the Senate passed a bill that would prohibit transgender kids from using the school bathroom that does not match their sex at birth; and the state House passed a bill Wednesday that bans teaching kids about gender identity or sexual orientation until sixth grade.

The most common argument from lawmakers who support such bills is that they are looking out for the best interests of children. “Children should not be pushed to receive experimental medical treatments that can leave them permanently sterile and physically marred for life,” Iowa Senator Jeff Edler said when debating the gender-affirming care bill, citing false information.

“The governor has said that she supports bills that protect our kids and will support legislation like this that does just that,” a spokeswoman for Sanders told the Associated Press. “Only in the far-left’s woke vision of America is it not appropriate to protect children.”

Both states have also introduced legislation easing child labor protection laws. On Tuesday, Sanders signed a law rolling back her state’s only oversight mechanism for child labor. In Iowa, Republicans unveiled a bill in February that would allow teenagers to work in previously prohibited jobs, such as in slaughterhouses or meatpacking plants, or operating heavy machinery.

While that proposed law could endanger teenagers, gender-affirming care can be lifesaving for LGBTQ minors. A study published in January in the New England Journal of Medicine found that trans and nonbinary teens who receive gender-affirming care have significantly less depression and anxiety than before treatment.

The Human Rights Campaign and ACLU urged the states’ governors not to sign the bills. Iowa’s “heartless legislation puts craven politics ahead of the health and safety of young people, and should strike fear in the hearts of parents” throughout the state, said Cathryn Oakley, the HRC’s state legislative director.

The ACLU also slammed the Arkansas state legislature. “By choosing to ignore the voices of those who are most directly impacted by this legislation, Arkansas politicians are sending a clear message that they value political posturing over the health and wellbeing of their constituents,” the group said.

On Wednesday, the Senate voted 81–14 to overturn the District of Columbia’s criminal codes, subverting many months of work that residents and officials invested to update laws that haven’t been dusted off in over 100 years.

It was all part of a right-wing charade against D.C.’s autonomy and fearmongering against even modest criminal justice reform. One D.C. resident described it as a “slap in the face.” Here’s every Senate Democrat and independent who joined Republicans in that slap:

• Tammy Baldwin
• Michael Bennet
• Richard Blumenthal
• Sherrod Brown
• Maria Cantwell
• Bob Casey Jr.
• Chris Coons
• Catherine Cortez Masto
• Kirsten Gillibrand
• Maggie Hassan
• Martin Heinrich
• John Hickenlooper
• Tim Kaine
• Mark Kelly
• Angus King
• Amy Klobuchar
• Ben Ray Luján
• Joe Manchin
• Bob Menendez
• Patty Murray
• Jon Ossoff
• Alex Padilla
• Gary Peters
• Jacky Rosen
• Brian Schatz
• Chuck Schumer
• Jeanne Shaheen
• Kyrsten Sinema
• Tina Smith
• Debbie Stabenow
• Jon Tester
• Mark Warner
• Ron Wyden

Thirteen Democrats plus Bernie Sanders voted “nay.” Raphael Warnock voted “present,” while Senators Tom Carper, Dianne Feinstein, and John Fetterman did not vote.

On Wednesday, the Senate voted 81–14 to overturn D.C.’s criminal code reforms, subverting months of work that residents and officials invested to update codes that haven’t been dusted off in over 100 years.

The vote signals the official death of D.C.’s proposed criminal code updates. Local officials will have to continue using archaic codes until the D.C. City Council can pass new ones that again have to be approved by the federal government.

The House voted last month to block both the updated criminal codes and another bill that would have extended voting rights to noncitizens in D.C. (An estimated 7 percent of D.C. residents are noncitizens of some form.) It did so with the help of 31 Democrats, including Elissa Slotkin, the party’s heir-apparent Senate candidate in Michigan, and lone anti-abortion Democrat Henry Cuellar.

Inspired by the moderate wing of his party, President Joe Biden announced last week his own support for joining the right-wing campaign against D.C.’s duly owed autonomy. Though Biden called “denial of self-governance” in Washington, D.C., “an affront to the democratic values on which our Nation was founded,” in April 2021, he announced last week that “if the Senate votes to overturn what D.C. Council did–I’ll sign it.”

He cited only one specific change, “lowering penalties for carjackings,” as a cause for concern. In reality, the bill updated an obsolete and unusual 40-year maximum sentence for carjacking to a more realistic 24-year maximum (still higher than most actual sentences).

With the Senate now joining the House in the rejection, and Biden presumably set to finish the task, the rule of a government overseeing 700,000 residents has been wholly subverted by the federal government. Not only is this a complete federal takeover of local government rule (one that seldom happens in any other community in America), but it also was one spurred forward by a dishonest fearmongering campaign propelled by conservatives.

The bill was approved unanimously by the D.C. City Council. It then voted 12–1 to override Mayor Muriel Bowser’s veto of it (she had said she approved 95 percent of the bill anyhow). And the reforms did not haphazardly reduce criminal sentences. The council tasked with updating the code (staffed by legal experts, including representatives from the D.C. attorney general’s and U.S. attorney’s offices) used data from a decade’s worth of cases to align the code with the kinds of penalties judges were already sentencing people to.

The bill also updated the court’s ability to stack offenses like building blocks. Though maximum sentences for various stand-alone offenses might’ve gone down (often because the existing ones were outdatedly high), the new codes defined many more offenses, and degrees of them, enabling courts to put together more proportional and logical sentences. For instance, in cases related to carjackings that also have a violent component, court sentences would more accurately reflect each characteristic of the crime.

The D.C. City Council was simply dusting off old codes and making them more efficient for courts. The updates didn’t even embody the larger shift of resources from overpolicing to community investment actually needed to start making the public safer. But moderate Democrats joined the right-wing charade anyway. Predictably, Democrats are getting no reward from Republicans for playing along; in her remarks today advocating to overturn D.C.’s reforms, Senator Joni Ernst displayed a sign that read “Life in Biden’s America,” depicting a crime scene with a chalk outline, yellow tape and all. Moderate Democrats, led by Biden, betrayed their supposed principles just to embarrassingly lose the politics of it all too.