The risk of ‘woke’ banking
SEVERAL years back, I asked what it would take to halt the “Diversity, Inclusion, Equity” (DIE) obsession in America. What would it take to get back to excellence and competence as the only criteria for employment? Perhaps it would require the bridges to start falling down. Though I suspect that if they did, certain people would claim they had fallen only because of “structural racism.”
Still, this week we had a good reminder of just how over-tolerant we have been of this insane, anti-excellence agenda.
Because although the bridges haven’t yet started to collapse, the banks have. And one reason is that the banks in question prioritized equity over excellence.
The DIE agenda constitutes an absolute obsession with exact representation (or preferably overrepresentation) of women at senior positions, including board positions in American companies. This obsession with female representation is only an issue with highstatus jobs, of course. Board seats, Hollywood star pay and so on. There is no movement that I am aware of that is pushing for equal female representation among roadway pavers in America. Funny that.
But for at least 15 years, diversity has been everything. After the last financial crisis, in 2008, the then-head of the International Monetary Fund came up with a cutesy line. If Lehman Brothers had been Lehman Sisters, Christine Lagarde used to claim, then perhaps the global financial crisis might not have happened.
Woke nonsense
Well that is a lot of balls, as The Post showed this week with the tale of Jay Ersapah. Jay is a woman and held the role of head of risk management at Silicon Valley Bank. But if Jay spent any time trying to manage risks, I don’t know how she did it because her more full-time job seemed to be to promote woke nonsense inside SVB.
For instance, as The Post revealed, Ersapah spearheaded such initiatives as a monthlong Pride campaign, a blog emphasizing mental-health awareness for LGBTQ+ youth and was cochair of the SVB European LGBTQIA+ Employee Resource Group. At such shindigs Ersapah would talk about what it was like to be “a queer person of color and a first-generation immigrant from a working-class background.”
By the standards of our day, Ersapah is an absolute winner. A winner of the intersectional grievance-studies search for the most oppressed person. The ethic of our day dictates that such a person not only has a right to any and every position but that their very being there will bring untold (and unspecified) benefits to the company.
Well, what a shame that the one thing Ersapah can’t identify as is “competent.” If she was competent, she might have been better at what should have been her main role — which was to manage risk. Something that she and the bank as a whole was clearly inept at. Not least because SVB was lending long and borrowing short — an unbelievably elementary error that banks have been studiously avoiding since the savings-andloan crisis of the 1980s.
But look at the things that obsessed the top brass at SVB and you can see that their eyes were on other balls.
On the failed bank’s board, only one member had a career in investment banking. The other board members were megadonors to the Clintons and other top Democrats. One was even an improv performer. By modern standards, the board did everything right. They had the right Democratic politics — clearly loathing half of the country. They even donated a staggering $73 million to Black Lives Matter groups.
‘Inclusive culture’
And this wasn’t just some expensive tokenistic thing. The bank’s own promotional materials stated that “SVB is committed to creating a more diverse, equitable, inclusive and accessible environment within SVB, within the innovation ecosystem, and in our communities. At the heart of this commitment is our effort to foster a more inclusive culture and increase racial, ethnic and gender representation.”
The bank boasted that it wanted to use its resources to “break down systemic barriers.”
All very nice, and clearly all pretty disastrous. Last time the global economy almost crashed was in part because of banks making loans to people on the basis — among other things — of their race. But a responsible bank should not issue a loan solely because of someone’s race, sex or sexuality. It should look simply and solely at whether the person can repay the loan or not — whether a mortgage or a business.
Make a priority of anything else, and you are not “managing risk.” You are creating it.
That is what SVB and other banks have done with their insane emphasis on modish, woke investment policies. So yes, for the time being, the bridges are still holding. The banks, however, are not. And we should be asking how we can get this country fast off a fixation that could bring the whole darn thing crashing down.