Silicon Valley Bank, founded in 1983, was born at a time when Silicon Valley was a synonym for "tech" and "innovation." This is no longer the case. Over the past 50 years, the tech community has evolved into a global system that supports many different kinds of innovation. SVB was the crown jewel of banks and the venture capital industry, not just in Silicon Valley, but globally.
CEO Greg Becker viewed SVB as a model twenty-first-century bank. He was relatively uninterested in mundane activities such as real estate finance, credit cards, and consumer loans. His goal was to finance the future. This meant cutting-edge technology above all.
SVB offered one-stop shopping to the tech community. They would make loans to tech startups. However, they required borrowers to deposit the loan proceeds in an account at SVB. Some loan agreements even prohibited any deposits by the borrower at other banks. This meant that SVB dominated Silicon Valley finance by controlling both sides of the balance sheet. Its assets were loans to entrepreneurs, and its liabilities were deposits from those same entrepreneurs.
This SVB high-tech financial concierge service was not limited to small start-ups either. Many companies that had been SVB clients in their start-up stage had gone on to great success and multi-billion-dollar cash positions. The CEOs of those successful clients including Roku, Vox, Etsy, Cisco, and Coinbase were loyal to SVB and continued to keep huge deposits there until the end. SVB was a financial cocoon in which the techies became comfortable. They saw no reason to go outside the cocoon.
A Climate Bank For Techies
Still, there was a fatal flaw in this business model. When everyday Americans hear the term "tech" they assume that SVB clients are working on operating systems, apps, improved search engines, semiconductors, and the like. That may have been true in the 1990s and early 2000s, but by 2020 SVB's idea of tech was dominated by climate change initiatives. As Kiran Bhatraju, CEO of tech firm Arcadia said, "What's missing from the narrative is SVB is a climate bank."
This is not the place to review the many flaws in so-called climate change science. The hard data shows that the earth is cooling today after a mild warming trend from 1985 to 2005. Neither the cooling nor warming trends are historically unusual. There's no evidence that CO2 causes global warming. It does have certain heat retention properties, but those properties are dominated by the true causes of climate change including solar cycles, ocean currents, and volcanic eruptions.
The United Nations climate models are so badly flawed that they can't even backtest with actual data. The notion that those models can forecast is absurd. The models are designed to overweight certain factors, ignore others, and facilitate input of corrupt data to produce pre-determined outcomes. Those models are junk science of the highest order.
Yet, in Silicon Valley none of that matters. The Valley is not interested in climate science, they're interested in how much money can be made catering to the elites who want soi-disant sustainable solutions. If the government is backing them and financing them, so much the better.
And the government is backing them. Nancy Pelosi's green new deal legislation that passed last August (with the misleading name Inflation Reduction Act) was a $900 billion grab bag of Democratic Party goodies including over $200 billion in tax credits and subsidies for climate change initiatives. The climate tech start-ups could not have made profits on their own, but they could make enormous profits claiming tax credits from the Pelosi scam.
Bear in mind that many start-ups are LLCs that pass their tax credits up to the backers who include wealthy venture capitalists such as Marc Andreessen, Bill Ackman, and Kleiner Perkins. Heavy Democratic donors were also given first crack at the equity in these start-ups with potential gains in the billions of dollars.
SVB was at the center of this climate change investment scam. Over 1,500 climate tech start-ups used SVB as their lead bank. SVB made over $3.2 billion of loans to these clients – more than the $1.8 billion they lost in their notorious bond sales just before the bank failed. These start-ups were involved with solar power, battery tech, clean energy, wildfire technology, and more.
Of course, many of these climate start-ups claim that their real interest was in doing "social good." I seem to recall that Sam Bankman-Fried claimed the same motive before he scammed $5 billion from the crypto market.
The Three-Headed Scam
Finally, SVB, the climate scam, and the Democrat Party are joined at the hip. The SVB board of directors included only one seasoned banker. The other eleven directors included a vineyard owner, an Obama cabinet official, a drug store chain CEO who spent a lot of her time as an improvisational actor, a diversity institution benefactor, and several venture capitalists (a business quite different from banking).
What they did have in common was they were all Democratic mega-donors. They donated to Obama, Hillary Clinton, and Biden. Director Garen Stagen and his wife donated $135,800 to the Biden, Hillary, and Obama campaigns. Director Kate Mitchell gave $50,000 to Hillary Clinton.
After Hillary's loss in 2016, Mitchell was so distraught she went to a Shinto shrine in Kyoto, Japan to offer prayers. Those activities are all fine and perfectly legal but don't have any obvious connection to banking and risk management. SVB was incompetent from top to bottom.
So, there's the thread. Democratic donors were in charge at SVB. The White House and Nancy Pelosi provided over $200 billion in handouts to anything with the name "climate" on the door. Techies chased the tech, and SVB wrote the checks. Treasury Secretary Janet Yellen, a Democrat apparatchik, bailed them out. Now the entire global financial system is in turmoil but the green new scammers don't care. They got theirs.
What better way to impose global control and profit than to rely on a global catastrophe, even an invented catastrophe?
But despite this climate change investment scam going on, it will become clear to everyone that oil and gas are not leaving the energy sector. They are the lifeblood of economies. And we still see opportunities in the traditional hydrocarbon-based sectors of the market despite the climate alarmists.
We feel the smartest thing to do is invest in a mixture of companies developing carbon-based and renewable energy sources.
These types of companies provide the most opportunities and can deliver outstanding total returns to shareholders.
Jim Richards
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