Category Archives: Bailouts

Ignore Silicon Valley fear-mongering about bank runs. This is a simple case of bad risk management.

Treasury Secretary Janet Yellen announced Sunday evening that Silicon Valley Bank’s uninsured depositors would gain access to their deposits on Monday. The Federal Deposit Insurance Corp. insures only deposits up to $250,000. The bailout creates incentives for risky behavior, teaching large depositors that they can throw money at risky banks without diversifying or conducting diligence. SVB long lobbied for looser risk limits by arguing that its failure wouldn’t create systemic risk and thus didn’t merit special intervention by the U.S. government. Yet on Sunday, Treasury deemed SVB “systemically important.”

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And politicians are lobbying to give the media billions.

Even while the media is blaring stories about the abuse of the Payroll Protection Plan loans from the Small Business Administration, its own industry took millions in loans and wants billions more.

Unlike many small businesses which were forced to shut down because of the lockdown, the media has been wrongly listed as ‘essential’ and exempted from the shutdowns, but that hasn’t stopped it from taking money that should have been used to compensate small business owners who can’t stay open.

Even when the media operations cashing in on the SBA loans aren’t anyone’s idea of a small business.

The Seattle Times maxed out its PPP loan with a $10 million payout. The Seattle Times is not only Washington State’s largest daily, but its parent company, the Seattle Times Company, owns two other papers, and had, as recently as 3 years ago, put out 7 papers. It also owned multiple newspapers in Maine which it sold off for over $200 million. It had two printing plants, one of which it sold. The Rotary Offset Press, which it still owns, continues to print a variety of magazines and newspapers.

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A message from Patrick Bet-David.