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March 18, 2023 - Rudy Giuliani
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Vivek Ramaswamy Explains The Silicon Valley Bank Collapse | March 17th 2023 | Ep 318
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Welcome to Rudy's Common Sense.
Today we have with us Vivek Ramaswamy, who is a, among other things, a candidate for President of the United States on the Republican side, and in my view has And during the course of this bank failure, failures now, has given some of the most concise and really accurate description of what happened, why it happened, and what you have to do to protect yourself.
So I asked him and he was kind enough to join us on the podcast.
And so let me introduce Vivek and maybe you could tell us just a little bit about your background and then just get right to An explanation that you give so well as to what happened that I think people will help them grasp this.
So Vivek, thank you for coming and tell us just a little bit about yourself and then dive right into it.
Yeah, thank you, Mayor.
I'm an entrepreneur by background.
I built a multi-billion-dollar biotech company that I built from scratch, developed five medicines, five of which are FDA-approved products today, one's for prostate cancer, and there's a number of other disease areas we're in.
I stepped down from my job as a CEO to write WOKE, Inc., the first book I wrote, Nation of Victims, and then a third book called Capitalist Punishment, which is due to come out later this year.
And I also co-founded Strive Asset Management, which competes directly against the likes of BlackRock.
And others in the ESG movement by steering companies away from politics back to products and profits.
So that's a bit about my background before I ran for president.
Now, let me explain what's going on here, because I understand how this game works, okay?
First, what happened with Silicon Valley Bank, and then the deeper problem.
So the thing with Silicon Valley Bank is that's a unique one-off bank that serves tech companies in Silicon Valley.
It also serves some Chinese tech companies and biotech companies.
But what that bank did is they took depositor money and they took some risks with it.
They bought these so-called mortgage-backed securities that lose their value when interest rates go up.
Well, when interest rates went up, the bank was in trouble and the bank ended up failing.
Now, those depositors, those tech companies at Silicon Valley, they should never have put that much money, sometimes to the tune of hundreds of millions of dollars for a tech startup, in this one Silicon Valley bank.
The reason they did it is the founders of those companies and those executives got private benefits in return often from Silicon Valley.
So they had a personal incentive to do it, but they still put way too much money there.
Now, the way the rules of the road work is that your bank account is normally insured up to $250,000 per account.
But the Silicon Valley folks said, no, no, no, we made this mistake, but hey, now we need a bailout.
And if you don't bail us out, there's going to be a bank run across America.
So they started fear-mongering, actually, and almost creating, in part, the fear for a bank run across the rest of the country.
And eventually the Biden administration stepped in last Sunday night and they said, okay, we're going to bail out those tech companies that effectively were the clients at Silicon Valley Bank.
I think that's crony capitalism.
It's cronyism at its worst.
It really is.
I mean, it's just, if this had been an oil and gas bank, a mid-size oil and gas bank in the middle of Oklahoma that nobody had heard of, there's no way they would have gotten that response.
You know what the Biden administration would have said?
Oh, these are risks, and these oil companies are making far too many profits, and if they're banking there, that's their fault, and we have to play with one set of the rules for all Americans, no special rules for oil companies.
But when it's Silicon Valley and tech, And especially a bank that was pledging allegiance to ESG and making commitments to diversity, equity, and inclusion and $5 billion commitments to a healthier planet to stave off climate change.
Literally, that's what this bank did.
$5 billion commitment just last year.
Well, the Biden administration says Silicon Valley's part of the favored class.
Let them play by a different set of rules.
So I've argued about that all this week.
Yeah.
Well, let's go back over this because I think that was beautiful, the way you laid that out, but just so that people get it.
So, this bank kind of operated on a different principle than at least I always thought was the principle of banking, which is your basic fiduciary obligation is to first preserve and then to make money for your customers.
This worked on principles that they considered more important, like diversity, climate change.
They also made a massive contribution to Black Lives Matter, if I recall correctly.
This is a bank that just lost its way, Mayor.
I mean, basically, they were taking risks they shouldn't have taken.
They have a customer base that was, you know, a lot of technology companies with CFOs who should have been paying attention to these risks.
They weren't.
And so, a lot of people were just asleep at the switch.
They were living in indulgence for a long time, but this is part of the disciplining that a market needs to go through to say that those bad decisions were not going to reward them, so people learn for the future.
Unfortunately, the Biden administration stopped that from happening from bailing out the tech companies who deposited there.
Now, to be clear, the bank did fail.
So that's where they're pointing and saying this isn't a bailout.
Well, it's not a bailout of Silicon Valley Bank, but it is a bailout of the tech companies who are banking there, including some Chinese tech companies and biotech companies too, a part of the story they didn't highlight.
But there's a deeper problem.
So I've been criticizing that all week, but I'm also a fan of not just pointing out the problem, but for delivering solutions.
And I think the deeper problem here is that the Federal Reserve has itself failed its duty over the last 25 years in this country, where they've been trying to play God to financial markets.
They've been trying to balance inflation and unemployment over the last 25 years, but they've done a terrible job of it, okay?
And so what this means is, and this is one of the core aspects of my domestic economic agenda, is to reform the Federal Reserve itself, put them back in their place, to go back to their one purpose that they ought to be focused on, which is just to stabilize the U.S.
dollar, period.
That's what the Federal Reserve should be focused on, instead of trying to play God and balance inflation and unemployment, which they've done a terrible job of anyway.
I'll share some fun facts with you, okay?
From all of our national history until the early 1970s, We were growing at over 4% GDP growth per year in America.
Since then, it's been dramatically lower.
What happened in the early 1970s, the U.S.
left the gold standard.
So, my view is, I don't think we should go back on the gold standard, but I think we should stabilize the dollar back against a basket of commodities, real things.
And if we do that, the Federal Reserve's responsibilities become a lot smaller, but we also actually stimulate the economy, and I think we can get back to 4-plus percent GDP growth in this country.
And we don't need to debate things like Social Security and Medicare cuts versus tax increases.
That's small ball.
If we actually deliver four plus percent GDP growth, that solves 90% of our problems in this country.
And so one of the things I've said is as President of the United States, I'd actually reduce the headcount of the U.S.
Federal Reserve from 20,000 plus, nearly 22,000 employees.
Reduce that to less than 2,000.
Reduce that headcount by 90%.
God bless you.
That's one of the most exciting things that I've heard.
You wouldn't know this, but that was my approach to city government.
I reduced the hospital system by 12,000 and all of a sudden our hospitals were considerably better than they were with the 12,000 useless workers that we have.
It's amazing how people forget that.
Fewer people can do more.
Yeah, when our agencies would go on strike, I would just say, stay out.
And they would come back within a day or so because we were just as efficient without them as with them.
I love that.
I really do.
The thing that really troubles me is there's no question over the last 10, since 2008 and probably before that, we have, I mean, you look at Dodd-Frank, et cetera, you've got a lot of picayune regulations.
At the same time, they seem not to have regulated the big things.
The things that happened in this bank, why weren't they flagged?
I'll tell you why.
A major contribution to a communist organization like Black Lives Matter?
All you have to do is read their manifesto and they're dedicated to Karl Marx.
That's right.
Or a $5 billion commitment to fighting climate change, as opposed to a healthier balance sheet, which they should have been worrying about.
Well, so here's a couple things I would say, all right?
This is part of the game they play.
That's part of the tithing at the temple of identity politics and of climate change, because in their hour of need, their depositors still got bailed out.
So in a certain sense, their trick worked, because it's by virtue signaling that they actually get the benefits From the Biden administration.
So it's not just that they're asleep at the switch, exactly.
It's cynical.
It's actually part of how the game itself is played.
So we can't miss that part of it.
But I think the other issue here is that the regulations, the more complex they are, complexity favors the well-connected, okay?
So it lends itself to capture.
It's 100% the way it works, so the complex regulations favor those who can lobby.
So Silicon Valley Bank actually very carefully stayed right under the $250 billion threshold, which they lobbied for, that allowed them to take these kinds of risks That if they were just over $250 billion instead of just under $250 billion, would have had them keep more capital controls at the company.
So they're playing that game, but their justification was they said that, oh, if we stand at $250 billion, then our justification to the public is we're not systemically important.
Why does that matter?
Well, they say if you're not systemically important, then the government won't come in to treat you in a special way.
But yet, in their hour of need, when actually the bank and their depositors made disastrous decisions, what did they say?
They said, guess what?
We are systemically important.
We need that bailout.
And they got it.
So, that's the problem with the regulatory state, is you think it's there to protect the people who they say it protects.
It actually hurts the people they're supposed to protect by creating the opportunity for arbitrage, for capture, for corruption, with the people who know how to play that system.
And Silicon Valley Bank is just one example of that.
I think you can make a generalization from banks to almost everything else.
And I can tell you from my many years of experience in state, federal, and local government, over-regulation leads to no regulation, ultimately.
That's exactly right.
That's exactly right.
And I'm sure there was a lot of corruption here because basically it was the San Francisco Fed.
I think Becker was on the board for a while of the San Francisco Fed.
And also, you had massive contributions to the Democrat Party.
Of course.
I mean, 90-something percent of the contributions were to one political party, and I think that's what they cashed in on when they went and asked for the bailout.
Exactly right.
I mean, I think that this is a game where you tithe, you send the right virtue signals, donate to the right organizations, from BLM to climate change to donating to the right political party.
But I'm sorry to say, congratulations to them.
They know how to play the game well, because it works.
Silicon Valley plays the game masterfully.
But I also think it's important to not just complain about the problem.
Believe me, I've been at the forefront of this, pointing out this problem and exposing the corruption.
But I'm running for president to actually do something about it.
We can't solve this problem unless we reform the Federal Reserve.
Just before we get to that, I'd like to know how deep is the problem?
So we see Signature Bank went under Now we have a number of other banks in deep trouble.
Republic Bank is in trouble.
I can't even mention all of them.
How endemic is the conduct that led to That led to the downfall of Silicon Valley Bank.
And is the problem at Signature the same, or is it a different problem?
So I think we're gonna have a, we have some frailty.
It's not at the level of 2008, but we have some frailty because for the longest time, we had low interest rates in this country.
We kept interest, the Fed kept interest rates low for way too long.
And that allowed a lot of these banks to take risks that they frankly shouldn't have been taking.
Now, the bell tolls, okay?
Rates are going up because we have inflation in this country.
So there are going to be some difficulties for some of these banks and financial institutions.
People can be smart about that by not ever having too much money in one bank account at one bank, because that's a risk that you take above the FDIC insurance threshold.
But I think that that's just a reality of when you have a cycle of inflation that's as bad as it is created by the Federal Reserve, with the Federal Reserve now jacking up interest rates to try to fight it.
That's why the real problem is you've got to reform the Federal Reserve itself.
And otherwise, we're just going to be whipsawed in one direction from another.
There's no Band-Aid to a cancer.
If you want to solve a cancer, you don't put a Band-Aid on top.
You actually got to go to the root cause, the tumor itself.
In this case, that's the Federal Reserve.
Does anybody overlook the board of a bank?
Like, if you looked at the board of this bank, I think there was only one person with experience in banking.
Excuse me, but you had an awful lot of silly people on this board.
It's often a problem.
We also have the chairman and the president doing insider trading two days before they announced that everybody should remain calm.
They sold their own stock.
So does anybody look at these people and say, my goodness, you got one person out of whatever, eight or nine or 10 that knows something about banking.
You better reconstitute that board.
And Barney Frank was on the board of Signature Bank.
I would have made a bet with you that any bank that Barney Frank was on the board of would fail.
You know, you would have been right if you made that bet.
But here's the reality.
There's oversight, the people who are supposed to be doing the oversight, they're asleep at the switch.
And you hear about this Environmental Social and Governance Agenda, ESG, you've heard this term?
I mean, I've been the leading, if I may say so, the leading crusader against the ESG movement in America over the last several years, okay?
And I've been competing against ESG-promoting asset managers like BlackRock in the market through actually being the only person founding a company, strive to compete in this way.
However, okay, however, here's the reality.
When they say ESG, they really just mean the environmental and the social agendas.
The climate change agenda and the race-based quota system agenda.
The G, the governance part, they actually forget about it.
So even though they say environmental, social, and governance, they're really just focused on environmental and social.
So the DEI agendas, the Black Lives Matter, the $5 billion commitments to fight climate change to make for a healthier planet, that's where A bank like Silicon Valley Bank is checking the boxes in spades, yet when it actually came to governance, either having a board that actually knew what they were doing, let alone not taking risks, let alone not having CEOs that are cashing out weeks before or days before a disastrous calamity, that's actually where they fall short.
And actually, many of these ESG funds did have disproportionate exposure to Silicon Valley Bank.
But that's the farce at the heart of this, is the governance that they claim that this is about, oversight or whatever.
Now that's just a Trojan horse for actually advancing these one-sided political, environmental and social agendas.
I think it's why it's both important to call it out, but as I've been trying to do both through the market and now through my run for the presidency, actually to do something to solve the problem.
And that's what I'm focused on, is delivering solutions.
When I interrupted you before, you were going to tell us what you would do uh to to change this uh yeah what should be done what you would do if you were president and or what should be done uh systemically to make this your picture so we can rest assured that our banks are being handled you know in in the general interest of all of us and not just for a specific political purpose
Exactly.
So I'd say three things that I put out, and thanks for having me today, and we'll continue this conversation.
I'm getting the feeling we're going to continue these conversations more over time.
So the three things I would say is one is reform of the Federal Reserve, as I mentioned.
The Federal Reserve should stop playing God, and yes, That does report into the U.S.
President.
I believe that, you know what, if somebody works for you and you can't fire them, that means they don't work for you, it means you work for them.
That is not the way that I will intend to run the executive branch of the government.
I am going to be free and clear and behave accordingly to fire people in these administrative bureaucracies that have taken on too much responsibility, including at the Federal Reserve, and put them back in their place to focus on just stabilizing the U.S.
dollar.
That's the first solution.
The second solution is an economic agenda that doesn't just debate spending cuts versus tax increases, but instead focuses on unlocking GDP growth in this country itself.
That's really the key to delivering the solution to a lot of these smaller economic problems.
Those are just symptoms of the fact that we have not had major GDP growth in this country in decades.
I think we can actually unlock it by abandoning the climate cult, unleashing U.S.
energy, and getting workers back.
That's one of the main constraints to the U.S.
economy today, is the shortage of workers.
And so I think a domestic policy agenda that accomplishes that makes these banking problems look small by comparison, because GDP growth is really our way out.
And then the third thing I would say is actually get politics out of the boardroom and out of capital markets.
Let's get these environmental and social agendas out of the financial system.
Stop having our banks and our asset managers and our financial actors co-mingle these political objectives with their financial decisions because that leads to disastrous outcomes.
And I've been very clear both through the Department of Labor and even through Even actually restoring fiduciary duties at the center of what the SEC and the Department of Labor are looking after when setting their regulations, instead of being Trojan horses for advancing a Biden-esque political agenda, that too will restore integrity to our capital markets.
No one else is talking about these issues, if I may say so.
A lot of my other fellow friends are in this field, but I think we need to focus on actually defining the agenda.
Forget the who.
We can decide the who next year.
We need to focus on the what and the why.
What do we stand for?
Why do we stand for it?
And this is an agenda for an American economic revival and really unleashing American exceptionalism itself.
That's something we've forgotten, and I'm running for president to restore it.
Well, Vivek, I think that was an excellent presentation, and I urge you also to spend a lot of time on the solutions.
And they're put in such a way, you know, three, that even though this is a complex subject, It's not, you know, the thing that people would commonly deal with or understand.
You perform a real service in putting it in ways that we can grasp.
I just ask you to do one other thing.
Remind people to Make sure they stay within that $250,000 limit because unless they're part of the princely class, they're not going to be bailed out.
Thank you.
I think diversification...
And personal responsibility, exactly.
You're right about that.
Personal responsibility is important.
And so, yeah, the cap is $250,000 officially now.
And if you're not part of the favored class, just make sure that you don't make the same mistakes that those tech startups in Silicon Valley did.
And I think that culture of personal responsibility is going to be part of what unleashes our national potential.
And the other thing I'll say is this.
From my perspective as running for office, for example, Let's focus on the what and the why.
Forget even about this question of the who.
No one's coming from on high to save us.
I think that that's a culture we sometimes lose.
Even in the Republican Party, we think someone's coming from on high to save us.
Nobody in politics is coming from on high to save us.
If we're going to be saved, it's going to be because we save ourselves.
And that starts with educating yourself and personal responsibility.
And so I'll just say this is, you don't even have to know you're voting for me, but if you want these ideas to be at the forefront of the Republican movement, I just, I mean, I have a simple ask, which is vivek2024.com.
V-I-V-E-K 2024.com.
Just visit there.
You could sign up.
Donate $1.
Don't make it a big donation.
Make it a tiny one.
Because what you actually need is more people joining the movement.
So I appreciate that opportunity.
Well, thank you, Vivek.
And good luck to you.
Whatever happens, good luck to you, and you've already performed a major service.
Keep going, okay?
I appreciate it, Mayor.
Good seeing you.
Thank you.
God bless you.
Thank you.
Well, I would say that was a very, very stimulating presentation by a very, very talented man.
And I haven't heard, on all of the coverage that we've had of this, which has been wall to wall, you know, on left, on the right, the television stations, the newspapers, not heard a better explanation of it.
Nor have I heard anyone talk about solutions.
Wow!
And the solutions, you know, you can follow that.
Take the Fed and get it back to its original purpose.
I would actually argue, we don't have the time for it, that a lot of what the Fed does is unconstitutional.
These powers were meant for accountable elected officials within one of the three branches of government, depending on the powers we're talking about, not appointed officials who have supplanted them.
You can delegate only so much of your power that's given to you by the Constitution.
The Constitution did not intend that our government be given over to subcontractors.
And there's a lot of legal, a lot of decisions by, albeit the conservative judges, that even before this led me to believe that there's going to be a major reconsideration of the alphabet agencies and just how much they've undermined
our constitution made us into a much more of a frankly socialist country.
We've got to revisit the agenda because many of us assume that you know banks and
businesses are run for the purpose of making a profit.
And then if we want to invest in our social, religious, political... For example, what would happen if a bank decided to take a hundred million dollars and give it to a pro-life?
Would there be a revolution?
And I'm pro-life, but that would be wrong.
I should make that decision, not the bank.
Because a lot of people, even people who are pro-life, may not want their money used in that way.
They get to make that decision.
And the emphasis on growth reminds me a lot of my hero, Ronald Reagan, because, and I'll conclude with this, because it's a good lesson to learn.
Different set of problems, different solutions.
Ronald Reagan ran on a simple, really a simple but enormously complex agenda.
He had, if I recall correctly, three objectives.
Objective number one was to revive the economy and growth.
Objective number two was to defeat communism.
End it.
Communism was evil.
It should be ended.
We should not coexist with it.
The end of the world.
Because of mutually assured destruction, which he considered to be immoral.
The world should not be kept safe because one of two people can destroy it.
And third, he wanted to reduce the deficit.
He accomplished two of those three objectives more than just about most of the presidents.
economic growth that we would love to have now.
That got us out of our problems, as Vivek was telling me.
He's one of the few American presidents that was a liberator, a major proportion.
I mean, you'd have to put it at, you'd have to look at Roosevelt with Europe in 5, 6, 7, 8, 9, 10 million people.
Or, I mean, Ukraine.
Ukraine was a part of the Soviet Union.
Poland was part of the Soviet Union.
You couldn't go to church in Poland when Ronald Reagan began his presidency.
A year after, you could go to church and thank Ronald Reagan.
And that's a hell of a thing.
But he couldn't do the third, because his emphasis was on growth, and his emphasis was on funding defense.
And if he came to, I got to deal with a deficit, but I got to protect the United States, protect the United States, he came first.
And then instead, he grew us out of the problem.
A great deal of room to cut down on spending.
This idea of putting the emphasis on growth is really very, very wise.
And also, um, creates much more enthusiasm about government.
People rally around positive things.
People don't rally to cut.
People rally around growing.
And then if cutting government is part of that, it becomes very, very supportive.
So I like this agenda.
I wish him luck.
I hope he becomes very, to, to, to being the nominee and there are an awful lot of candidates, including our former great president.
Um, but this, this, um, I'm not saying he isn't going to get the nomination, or he is, but even if he doesn't, he's now done more than a lot of the potential candidates in terms of going to run for president to get ideas out.
They don't get a damn idea.
All they do is collect money.
He's already done that.
So congratulations.
Let's pay attention to it.
And if you disagree, let's disagree with it.
Fine.
It sounds sound to me.
And the last warning, Stay within that $250,000 limit, boy.
They wouldn't even get their $250,000.
Biden wouldn't even recognize them being part of the United States.
Reminder, let's support people who support us.
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