March 15, 2023

Wednesday, March 15, 2023. Annette’s News Roundup.

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Joe is always busy. Yes, busier than ever.

More on the Banking Crisis that was.

From Reuters Sustainability. Quote of the Day.

“Despite the regrettable losses for shareholders, and the almost inevitable market jitters, Treasury head Janet Yellen has made the sensible decision at this stage to bring stability and confidence into the critical banking sector. The fall out of not doing so could have had serious, far-reaching consequences for the U.S., and therefore global, economy.”

Nigel Green, CEO and founder of global financial advisory firm deVere Group.

How Biden saved Silicon Valley startups: Inside the 72 hours that transformed U.S. banking.

On Sunday afternoon, an exhausted group of Biden administration officials gathered to put the finishing touches on a hastily composed plan to stave off a nationwide banking crisis.

Just a little more than 72 hours had passed since Silicon Valley Bank suddenly collapsed, rocking the tech industry and igniting fears that the U.S. was on the verge of a financial meltdown.

The bank’s demise had come as just as much of a surprise to the White House as it did to the public, triggering a weekend sprint to contain the fallout that spanned several agencies and all hours of the day and night.

The result, announced just minutes before financial markets in Asia reopened, was sweeping: The federal government would provide SVB’s depositors with access to all their funds, effectively averting painful financial uncertainty — and the threat of heavy losses — for thousands of venture-backed startups. Signature Bank, which had followed SVB into insolvency, would receive the same guarantee.

Even more critically, the Federal Reserve would provide a massive lifeline to the nation’s banks: It would singlehandedly give all other similar lenders access to funds designed to keep them afloat and quell the panic brewing across the country.

The swift and forceful action to rescue depositors at the two failed midsize lenders rewrote crucial banking guardrails in ways that could reverberate for years. It put the Biden administration’s stamp — for good or ill — on the sector’s future financial stability, while sending a message about the government’s willingness to rescue private businesses in new ways. It also was done without passing a single new act of Congress or holding hearings among elected officials in recent days.

And it almost didn’t happen.

To read the rest of Politico’s version of an ‘adventure’ that might have destroyed the economy worldwide, click here.

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Silicon Valley Bank Isn’t Lehman.

If there is one thing almost all observers of the economic scene have agreed about, it is that the issues facing the U.S. economy in 2023 are very different from those it faced in its last crisis, in 2008.

Yet suddenly we seem to be replaying some of the same old scenes. Silicon Valley Bank wasn’t among the nation’s largest financial institutions, but then neither was Lehman Brothers in 2008. And nobody who paid attention in 2008 can help feeling the shivers while watching an old-fashioned bank run.

But S.V.B. isn’t Lehman, and 2023 isn’t 2008. We probably aren’t looking at a systemic financial crisis. And while the government has stepped in to stabilize the situation, taxpayers probably won’t be on the hook for large sums of money.

To make sense of what happened, you need to understand the reality of what S.V.B. was and what it did.

Silicon Valley Bank portrayed itself as “the bank of the global innovation economy,” which might lead you to think that it was mostly investing in highly speculative technology projects. In fact, however, while it did provide financial services to start-ups, it didn’t lend them a lot of money, since they were often flush with venture capital cash. Instead, the cash flow went in the opposite direction, with tech businesses depositing large sums with S.V.B. — sometimes as a quid pro quo but largely, I suspect, because people in the tech world thought of S.V.B. as their kind of bank.

The bank, in turn, parked much of that money in boring, extremely safe assets, mainly long-term bonds issued by the U.S. government and government-backed agencies. It made money, for a while, because in a low-interest-rate world long-term bonds normally pay higher interest rates than short-term assets, including bank deposits.

But S.V.B.’s strategy was subject to two huge risks.

First, what would happen if and when short-term interest rates rose? (They couldn’t fall significantly, because they were already extremely low.) The spread on which S.V.B.’s profits depended would disappear — and if long-term interest rates rose as well, the market value of S.V.B.’s bonds, which paid lower interest than new bonds, would fall, creating large capital losses. And that, of course, is exactly what has happened as the Fed has raised rates to fight inflation.

Second, while the value of bank deposits is federally insured, that insurance extends only up to $250,000. S.V.B., however, got its deposits mainly from business clients with multimillion-dollar accounts — at least one client (a crypto firm, of course) had $3.3 billion at S.V.B. Since S.V.B.’s clients were effectively uninsured, the bank was vulnerable to a bank run, in which everyone rushes to withdraw money while there’s still something left.

And the run came. Now what?

Even if the government had done nothing, the fall of S.V.B. probably wouldn’t have had huge economic repercussions. In 2008 there were fire sales of whole asset classes, especially mortgage-backed securities; since S.V.B.’s investments were so boring, similar fallout would be unlikely. The main damage would come from disruption of business as firms found themselves unable to get at their cash, which would be worse if S.V.B.’s fall led to runs on other medium-size banks.

That said, on precautionary grounds government officials felt — understandably — that they needed to find a way to guarantee all of S.V.B.’s deposits.

It’s important to note that this doesn’t mean bailing out stockholders: S.V.B. has been seized by the government, and its equity has been wiped out. It does mean saving some businesses from the consequences of their own foolishness in putting so much money in a single bank, which is infuriating — especially because so many tech types were vocal libertarians until they themselves needed a bailout.

Indeed, probably none of this would have happened if S.V.B. and others in the industry hadn’t successfully lobbied the Trump administration and Congress for a relaxation of bank regulations, a move rightly condemned at the time by Lael Brainard, who has just become the Biden administration’s top economist.

The good news is that taxpayers probably won’t be on the hook for much if any money. It’s not at all clear that S.V.B. was actually insolvent; what it couldn’t do was raise enough cash to deal with a sudden exodus of depositors. Once things have stabilized, its assets will probably be worth enough, or almost enough, to pay off depositors without an infusion of additional funds.

And then we’ll be able to return to our regularly scheduled crisis programming. (Paul Krugman, Nobel Prize winning economist, New York Times).

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As the banking crisis happened…

Oil Drilling in Alaska - the President allowed some and stopped some.

Biden's Arctic oil drama.

The White House is looking to strike a political balance with new decisions on Arctic oil.

Driving the news: The Interior Department on Monday is slated to back ConocoPhillips' big Willow project on Alaska's North Slope, per a source familiar with the decision and multiple news reports.

• Approval of three drilling pads — not five, as ConocoPhillips initially sought — caps a years-long political and bureaucratic battle.

• It will follow Sunday's announcement of protections elsewhere in the area to block drilling in Alaska's Arctic seas and 13 million acres onshore in the same region as Willow.

The big picture: Willow is substantively and symbolically important.

• The multi-decade project is estimated to produce over 180,000 barrels per day at its peak in a state where political leaders are keen to revive stagnant output.

• Oil execs have called it a test of whether the White House will follow through on support for domestic production as the war in Ukraine puts a fresh focus on energy security.

Yes, but: Environmentalists see a different test: one of Biden's bona fides on climate and preserving sensitive Arctic ecosystems.

• The Wilderness Society's Karlin Itchoak, in a statement, welcomed the new conservation but said it is "not nearly sufficient to blunt the impact" of Willow.

The intrigue: Whether Willow is a climate threat or a rounding error depends on how you interpret Interior's sprawling environmental analysis.

• It finds the big new development would create about 280 million metric tons of CO2-equivalent over 30 years, mostly from use of the oil produced.

• Its approval comes as emissions must fall quickly and fossil fuel reliance must decline to keep global climate goals from slipping away.

Yes, but: On an annual basis, the estimated emissions are less than 1 percent of the 2019 U.S. total, per the analysis.

• Willow is estimated to produce roughly 600 million barrels of oil over 30 years. Current global demand is roughly 100 million barrels per day.

What they're saying: "Notwithstanding howls from environmentalists, the greenlighting of Willow would appear to suggest the administration has not yet abandoned its wartime fossil fuel pragmatism," the research firm ClearView Energy Partners said in a note.

Threat level: Interior's analysis details the sweeping changes global warming is having on the area where Willow would be built, which is one of the fastest-warming locations on Earth.

• It even includes the possibility that permafrost thaw may pose project infrastructure challenges, while also accelerating the release of greenhouse gases.

What we're watching: Likely litigation over Willow, and possibly more over the land and ocean conservation steps. (Axios).

Seven things to know about Biden’s big oil move.

The Biden administration paired two hot-button decisions on oil drilling in Alaska in recent days — blocking future drilling in the Arctic Ocean while giving the go-ahead to a huge oil drilling project on public lands in Alaska.

The Interior Department’s announcement Monday that it approved ConocoPhillips’ multibillion-dollar Willow project follows decades of industry effort since the oil and gas giant first acquired leases during the Clinton administration.

The White House seemingly sought to muffle environmentalists’ outcry to the Willow decision by announcing new drilling prohibitions in Alaska over the weekend. The project has become a contentious political issue, pitting Alaska politicians who support the project against environmentalists who oppose drilling on public lands.

Monday’s decision likely won’t be the end of the lengthy Willow dispute, as lawsuits challenging the administration’s move are almost certain.

Here’s what to know about the Willow decision:

What’s in the proposal?

The administration approved ConocoPhillips’ plans to drill in the northeast portion of the National Petroleum Reserve on Alaska’s North Slope.

The Biden administration couched its announcement Monday by stressing its approval of a scaled-back version of the drilling plan.

The Interior Department is approving three of the five drill sites proposed by ConocoPhillips. The company is also relinquishing its rights to 68,000 acres of its existing leases in the NPR-A, the administration said.

What does it mean for Alaska?

Alaska lawmakers and ConocoPhillips have been lobbying the administration to approve the massive drilling project, arguing that it bolsters domestic energy security while creating jobs and revenue for the federal government.

ConocoPhillips estimated that the project would create more than 2,500 jobs during construction, and about 300 permanent jobs after that.

The Alaska congressional delegation hailed the Willow approval as a victory Monday.

The Alaskans’ all-out push for Willow’s approval even involved a meeting between the state’s full congressional delegation and President Joe Biden during the run-up to the final announcement. Murkowski, Republican Sen. Dan Sullivan and Democratic Rep. Mary Peltola were united in their push for the administration to approve an “economically viable” version of the project.

The lawmakers have said that Alaska Natives overwhelmingly support the project. Sullivan said last week that Alaskans who support drilling in the NPR-A often refer to environmental groups in the Lower 48 as being guilty of “eco-colonialism” for trying to tell Alaskans how to live their lives.

“We finally did it, Willow is finally reapproved, and we can almost literally feel Alaska’s future brightening because of it,” said Sen. Lisa Murkowsi (R-Alaska). “After years of relentless advocacy, we are now on the cusp of creating thousands of new jobs, generating billions of dollars in new revenues, improving quality of life on the North Slope and across our state, and adding vital energy to [the Trans-Alaska Pipeline System] to fuel the nation and the world,” Murkowski said. (Politico).

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One good man will honor another.

Biden says Carter asked him to do his eulogy.

President Biden said Monday that former President Carter, who is in hospice care, has asked him to deliver his eulogy when he dies.

“I spent time with Jimmy Carter, and it’s finally caught up with him, but they found a way to keep him going for a lot longer than they anticipated because they found a breakthrough,” Biden said at a Democratic National Committee fundraiser.

“He asked me to do his eulogy,” he added.

The president then appeared to catch himself for sharing the information, saying, “Excuse me, I shouldn’t say that.” 

Biden was speaking to about 40 guests at a fundraiser in Rancho Santa Fe, Calif., alongside Rep. Scott Peters (D-Calif.), while on a three-day trip to California and Nevada. (The Hill).

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Biden EPA launches landmark push to curb ‘forever chemicals’ in drinking water.

The Biden administration is proposing the first-ever federal drinking water limits for toxic chemicals used to make nonstick materials like Teflon, stain-resistant carpeting and military firefighting foam, which are estimated to be contaminating 200 million Americans’ drinking water.

It’s an aggressive move that represents what health experts and community activists say is a long-overdue effort to begin reining in the widespread contamination from PFAS “forever” chemicals, which are linked with cancer, reproductive problems and a wide array of other health ailments. If finalized, the regulation would spark the first major upgrade to the safety of the nation’s drinking water in three decades.

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Biden Blasts Florida’s ‘Cruel’ Anti-Trans Laws on ‘The Daily Show.’

Joe Biden slammed Florida’s “cruel” treatment of transgender people on an episode of The Daily Show with Kal Penn that will air Monday night. “What’s going on in Florida is, as my mother would say, close to sinful,” the president said. “I mean, it’s just terrible what they’re doing.”  (The Daily Beast).

 

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Biden will bypass Congress as he tries to tamp down gun violence.

Almost four months into 2023, there have been 109 mass shootings in which four or more people were injured or killed, according to the Gun Violence Archive.

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President Joe Biden will sign an executive order aimed at expanding background checks during his visit Tuesday to Monterey Park, Calif., where 11 people were gunned down in January.

The White House said the move will get “the U.S. as close to universal background checks as possible” without legislation, as Congress remains gridlocked on the issue. Gun safety advocates have pushed administration officials on this front for months. (Politico).
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Kamala is always busy.

Touch 👇 to see who came to the Vice President’s annual bi-partisan dinner for women Senators.

Statement by Press Secretary Kirsten Allen on Vice President Harris’s Travel to Ghana, Tanzania, and Zambia  | The White House.

Vice President Kamala Harris and Second Gentleman Douglas Emhoff will travel to Accra, Ghana; Dar es Salaam, Tanzania; and Lusaka, Zambia from March 25 to April 2. The Vice President’s visit will build on the recent U.S.-Africa Leaders Summit that President Biden hosted in Washington in December 2022. The trip will strengthen the United States’ partnerships throughout Africa and advance our shared efforts on security and economic prosperity. Throughout the trip, in partnership with African governments and the private sector, the Vice President will advance efforts to expand access to the digital economy, support climate adaptation and resilience, and strengthen business ties and investment, including through innovation, entrepreneurship, and the economic empowerment of women. The Vice President will meet with President Nana Akufo-Addo of Ghana, President Samia Hassan of Tanzania, and President Hakainde Hichilema of Zambia to discuss regional and global priorities, including our shared commitment to democracy, inclusive and sustainable economic growth, food security, and the effects of Russia’s unprovoked war in Ukraine, among other issues. The Vice President will strengthen people-to-people ties and engage with civil society, including young leaders, business representatives, entrepreneurs, and members of the African Diaspora.

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Update on Women in the US workforce.

It's Equal Pay Day. The salary gap between men and women isn't shrinking.

Tuesday is Equal Pay Day: March 14th represents how far into the year women have had to work to catch up to what their male colleagues earned the previous year.

In other words, women have to work nearly 15 months to earn what men make in 12 months.

82 cents on the dollar, and less for women of color

This is usually referred to as the gender pay gap. Here are the numbers:

- Women earn about 82 cents for every dollar a man earns
- For Black women, it's about 65 cents
- For Latina women, it's about 60 cents

Those gaps widen when comparing what women of color earn to the salaries of White men. These numbers have basically not budged in 20 years. That's particularly strange because so many other things have changed:

- More women now graduate from college than men
- More women graduate from law school than men
- Medical school graduates are roughly half women

That should be seen as progress. So why hasn't the pay gap improved too? (NPR).

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The number of women in the workforce tops pre-pandemic levels for first time.

The number of women in the workforce in February was higher than pre-pandemic levels for the first time, according to the latest jobs data out Friday.

Why it matters: The strength of women's return to work was faster than anyone could've imagined just a few years ago when dire predictions about a "she-cession" flooded the news.

By the numbers: 105,000 of the 311,000 jobs added in February were in the leisure and hospitality sector, where women hold the majority of positions.

• Overall, women's labor force participation — that is, the percentage of women working or looking for work — is at 57.2%, almost back to the February 2020 number, 57.9%.

• Men's labor force participation rate is much higher than women's, at 68%, but still down more than a point from pre-pandemic levels.

Go deeper: College-educated women did not leave labor force during pandemic (Axios).
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Abortion, Abortion, Abortion

Ohio Supreme Court to review block of near-ban on abortion.

COLUMBUS, Ohio -- The Ohio Supreme Court agreed Tuesday to review a county judge’s order that is blocking enforcement of the state's near-ban on abortions, and to consider whether the clinics challenging the law have legal standing to do so.

In its split decision, the court, however, denied Republican Attorney General Dave Yost's request to launch its own review of the right to an abortion under the Ohio Constitution, leaving those arguments to play out in lower court.

This mean abortions remain legal in the state for now up to 20 weeks' gestation. (ABC News).

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The Atlantic Nancy Pelosi interview.

Nancy Pelosi: ‘Follow the Money.’

The former speaker of the House discussed Silicon Valley Bank, January 6 revisionist history, and more in an interview focused on money and greed.

House Speaker Emerita Nancy Pelosi’s message at the annual South by Southwest festival could be summarized in three words: Follow the money.

Pelosi uttered that specific phrase—and similar versions of it—several times during her interview with Evan Smith, a contributing writer at The Atlantic, as part of the magazine’s Future of Democracy summit this morning in Austin, Texas. (Atlantic).

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Trump and DeSantis. Both Off-Key.

Trump sings for and with the January 6 Prisoners, and not so well.

Trump’s Latest Failure: Music – a review in Rolling Stone.

Donald Trump has failed at so much in his life that it may seem unfair to say his recent foray into music is unique in its badness. After all, the former president has bankrupted a casino, defaulted on an airline, and flubbed ownership of a professional football team, to name just a few of his ignominious flops. In this grand scheme of things, what’s one terrible song in the face of a lifetime of costly failures? Is Trump’s newly released “Justice for All” single truly on par with his more expensive flops in terms of sheer embarrassing badness? Oh God, yes. Yes, it sure is.

To begin with, the song itself largely consists of an atonal shouting rendition of “The Star-Spangled Banner,” “sung” by the J6 Prison Choir — a group of twenty or so men jailed at the Washington, D.C. Correctional Treatment Facility for their participation in the Jan. 6 insurrection at the U.S. Capitol complex.

While Trump himself gets top billing for the track, his actual involvement is limited to a nasally recitation of the Pledge of Allegiance that bursts through the choir’s sung verses at awkwardly timed moments with all the solemnity and bravado you’d expect from a man who does the Elain Benes dance after every political rally. Ostensibly this echo-heavy call and response act is to remind listeners that the song is patriotic and American and very serious, but in effect it only reminds people that Trump might not actually know the words to the national anthem in the first place.

To the extent that there is a through-line that holds the wildly off-balance track together, it’s the brooding keyboard tones tasked with the herculean challenge of making it seem like everyone is in tune with one another. That it fails spectacularly at that challenge is as much an indictment of the song’s anonymous producer as it is the singing ability of everyone involved. Those hoping for a dash of coherent melody need not apply.

Then again, those looking for a coherent melody are probably not the song’s intended audience to begin with. Although it knocked off Miley Cyrus’ “Flowers” to reach Number One on iTunes last weekend, Varietynotes that songs can assume a commanding-seeming top position on iTunes with just a few thousand sales in a single day, giving a sense of inflated significance that doesn’t necessarily translate to broader chart success.

On Spotify, for instance, “Justice for All” has wallowed in relative obscurity with less than 150,000 plays, while Cyrus broke a company record with 100 million streams in her single’s first week out. Trump’s track seems less concerned with artistic merit and aural pleasure than it does MAGA virtue signaling, as the former president moves ahead with his 2024 reelection bid; the track’s most sincere moment comes in its final seconds, as the prisoners begin to chant “USA! USA!,” dropping the somber pretense of respectful victimhood in favor of the chest-thumpery better suited to a group of dudes accused of smashing their way into Congress. (Trump, at this point in the song, has gone conspicuously silent.)

Promises to use the song’s sales to support the incarcerated J6 defendants notwithstanding, it’s hard to say exactly who “Justice for All” is really for? Does the MAGA universe care that it’s largely unlistenable? Do they cue it up on their headphones and push through the dirge while they go jogging, or blast it from the speakers of their extended cab F-150s while they record a YouTube video about how seeing a trans cashier at Walmart ruined their weekend? What is this the soundtrack to, exactly? The next presidential inauguration party? Let’s hope not. (Rolling Stone).
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Was DeSantis alerting Putin that Russia can count on him?

Is he signaling to Putin - You won’t be sorry if you interfere with the US elections on my behalf?

Ron DeSantis says support for Ukraine is not a 'vital' U.S. interest, calls the war a 'territorial dispute.’

Florida Gov. Ron DeSantis told Fox News Host Tucker Carlson that aiding Ukraine is not a “vital” interest for the United States, a position that is similar to that of former President Donald Trump.

“While the U.S. has many vital national interests – securing our borders, addressing the crisis of readiness within our military, achieving energy security and independence, and checking the economic, cultural, and military power of the Chinese Communist Party – becoming further entangled in a territorial dispute between Ukraine and Russia is not one of them,” DeSantis wrote in response to a Fox News questionnaire, which Carlson shared on Twitter Monday. (USA Today).

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DeSantis, Backing Away From Ukraine, Angers G.O.P. Hawks.

Republican foreign policy hawks recoiled at Mr. DeSantis’s statement on “Tucker Carlson Tonight” on Fox News on Monday night, in which the governor deviated from the position held by most of the Republican establishment on Capitol Hill, including Senator Mitch McConnell of Kentucky, the minority leader. Mr. McConnell and other top congressional Republicans have framed the invasion by President Vladimir V. Putin of Russia as a fight to defend the post-World War II international security framework.

“DeSantis is wrong and seems to have forgotten the lessons of Ronald Reagan,” said former Representative Liz Cheney of Wyoming, who led the House select committee investigating Mr. Trump’s efforts to overturn the 2020 election.

Senator Lindsey Graham, Republican of South Carolina, said in an interview on Tuesday morning that he “could not disagree more” with Mr. DeSantis’s characterization of the stakes attached to the defense of Ukraine.

Senator Marco Rubio of Florida, a member of the Senate Foreign Relations Committee, also took issue with Mr. DeSantis’s comments — a significant rebuke from the senior Republican in Mr. DeSantis’s home state.

“I don’t know what he’s trying to do or what the goal is,” Mr. Rubio, a former presidential candidate, told the conservative radio host Hugh Hewitt.

And Senator John Cornyn of Texas told Politico he was “disturbed” by Mr. DeSantis’s comments. (New York Times).

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Reparations.

San Francisco to air Black reparations plan, $5M per person.

SAN FRANCISCO (AP) — Payments of $5 million to every eligible Black adult, the elimination of personal debt and tax burdens, guaranteed annual incomes of at least $97,000 for 250 years and homes in San Francisco for just $1 a family.

These are just some of the recommendations made by a city-appointed reparations committee tasked with a thorny question: What would it take to atone for the centuries of U.S. slavery and generations of systemic racism that continue to keep Black Americans on the bottom rungs of health, education and economic prosperity, and overrepresented in prisons and homeless populations?

A first hearing underway before the city’s Board of Supervisors on Tuesday could offer a glimpse of the board’s appetite for advancing a reparations plan that would be unmatched nationwide in specificity and breadth. Critics have slammed it as financially and politically impossible. One conservative analyst estimated that each non-Black family in the city would have to pay at least $600,000.

Supervisor Shamann Walton, who is Black, opened the hearing by stating the board would not say Tuesday “what recommendations we will be supporting or moving forward with.” He also expressed thanks the committee and the board for delving into an issue that has made him and other reparations supporters the target of racist comments and threats.

“It is not a matter of whether or not there is a case for reparations for Black people here in San Francisco. It is a matter of what reparations will and should look like yet,” Walton said, “and still we have to remind everyone why this is so important. (Associated Press).

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