[Plura-list] SVB bailouts for everyone - except affordable housing projects

[Cory Doctorow]

Read today's issue online at: https://pluralistic.net/2023/04/15/socialism-for-the-rich/

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There's just two days left in the Kickstarter campaign for the audiobook of my next novel, a post-cyberpunk anti-finance finance thriller about Silicon Valley scams called *Red Team Blues*. Amazon's Audible refuses to carry my audiobooks because they're DRM free, but crowdfunding makes them possible.

http://redteamblues.com

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Today's links

* SVB bailouts for everyone - except affordable housing projects: Even the shareholders got billions.

* Hey look at this: Delights to delectate.

* This day in history: 2003, 2008, 2013, 2018

* Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading

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🧓🏻 SVB bailouts for everyone - except affordable housing projects

For the apologists, the SVB bailout was merely prudent: a bunch of innocent bystanders stood in harm's way - from the rank-and-file employees at startups to the scholarship kids at elite private schools that trusted their endowment to Silicon Valley Bank - and so the government made an exception, improvising measures that made everyone whole without costing the public a dime. What's not to like?

But that account doesn't hold up to even the most cursory scrutiny. Everything about it is untrue. Take the idea that this wasn't a "bailout" because it was the depositors who got rescued, not the shareholders. That's just factually untrue: guess where the shareholders kept their money? That's right, SVB. The shareholders of SVB will get billions in public money thanks to the bailout. *Billions*:

https://pluralistic.net/2023/03/18/2-billion-here-2-billion-there/#socialism-for-the-rich

But is it *really* public money? After all, the FDIC payouts come from a pool of funds raised from all of America's banks. The billions the public put into SVB will be recouped through hikes on the premiums paid by every bank. Well, sure - but who do you think the banks are going to gouge to cover those additional expenses? Hint: it's not going to be the millionaires who get white-glove treatment and below-cost loans. It'll be the working people whom the banks steal billions from every year in overdraft fees - 78% of these are paid by 9.2% of customers, the very poorest, and they amortize to a 3,500% loan:

https://pluralistic.net/2021/04/22/ihor-kolomoisky/#usurers

As Adam Levitin put it on Credit Slips:

> They will pass those premiums through to customers because the market for banking services is less competitive than the market for capital. In particular, the higher costs for increased insurance premiums are likely to flow to the least price-sensitive and most “sticky” customers:  less wealthy individuals.  So average Joes are going to be facing things like higher account fees or lower APYs, without gaining any benefit. Instead, the benefit of removing the cap would flow entirely to wealthy individuals and businesses. This is one massive, regressive cross-subsidy. It's not determinative of whether raising the cap is the right policy move in the end, but this is something that should be considered.

https://www.creditslips.org/creditslips/2023/03/the-regressive-cross-subsidy-of-uncapping-deposit-insurance.html

The SVB apologists display the most curious and bizarre imaginative leaps...and imaginative failings. For them, imagining that regulators will just wing it to the tune of hundreds of billions in public money is simplicity itself. Meanwhile, imagining that those same regulators would say, "Not one penny unless every shareholder agrees to sign away their deposits" is literally impossible.

This bizarrely inconstant imagination carries over into *all* of the claims used to justify the SVB bailout - like, say, the claim that if SVB wasn't bailed out, everyone would pile into too big to fail banks like Jpmorgan. This is undoubtably true - unless (and hear me out here!), regulators were to use this failure as a launchpad for *public* banks, and breakups of Jpmorgan, Wells Fargo, Citi, et al.

This is a very weird imaginative failure. America operated public banks. It had broken up too big to fail banks. These weren't the deeds of a fallen civilization whose techniques were lost to the mists of time. There are literally people alive today who were around when America operated nationwide public banks - a practice that only ended in 1966! We're not talking about recovering the lost praxis of the druids who built Stonehenge without power-tools, here.

The most telling imaginative failure of SVB apologists, though, is this: they think that people are angry that the government saved the janitors at startups and the scholarship kids at private schools, and *can't imagine* that people are angry that America *didn't* save anyone else. If you're a low-income student at an elite private school, there's billions on hand to save you - but not because the government gives a damn about you - saving you is a side effect of saving all the rich kids you go to school with.

Likewise, the startup janitors aren't the target of the bailout - they're overspill from the billions mobilized to rescue the personal fortunes of tech billionaires who supply VCs' investment capital. If there was a way to bail out the startups without bailing out the janitors, that's exactly what would happen.

How do I know this? Well, first of all, the "investors" who demanded - and received - a bailout are on record as *hating workers* and wanting to fire as many of them as possible. As one of the loudest voices for the bailout said of Twitter employees, in a private message to Elon Musk following the takeover: "Day zero: Sharpen your blades boys 🔪":

https://pluralistic.net/2023/03/21/tech-workers/#sharpen-your-blades-boys

But there's even better evidence that the bailout's intended target was wealthy, powerful people, and every chance to carve out working people was seized upon. When regulators engineered the sale of SVB to First Citizens Bank, they did not require First Citizens to honor SVB's community development obligations, killing thousands of affordable housing units that had been previously greenlit:

https://calreinvest.org/wp-content/uploads/2021/05/Community-Benefits-Plan-SVB-CRC-GLI.pdf

Tens of thousands of people wrote to regulators, urging them to transfer SVB's Community Benefits Plan obligation to First Citizens:

https://www.dailykos.com/campaigns/petitions/sign-the-petition-save-affordable-housing-keep-the-promises-silicon-valley-bank-made

As did Rep Maxine Waters, the ranking member of the House Financial Services Committee:

https://democrats-financialservices.house.gov/uploadedfiles/318_cwm_ltr_fdic.pdf

But First Citizens - a bank whose slot in America's top-20 banks was secured through a string of exceptions, exemptions and waivers - was *not* required to take on SVB's obligations to carry out loans to build thousands of affordable housing units in the Bay Area and Boston, including a 112-unit building for people with disabilities planned for a plum spot across from San Francisco City Hall:

https://www.levernews.com/regulators-stiffed-low-income-communities-in-silicon-valley-bank-bailout/

All those people who wanted SVB's community development obligations to carry forward vastly outnumbered the people calling for billionaires portfolio companies to be saved - but they merely spoke on behalf of people who sought the most basic of human rights - shelter. No one listened to them. Instead, it was the hyperventilating all-caps "investors" who spent SVB's no-good weekend shouting on Twitter about the fall of civilization who got what they wanted, with a bow on top, and a glass of publicly funded warm milk before bed.

The US finance sector is reckless to the point of being criminally negligent. It constitutes an existential risk to the nation. And yet, every time it gets into trouble, regulators are able to imagine *anything* and *everything* to shift their risks to the public's shoulders.

Meanwhile, everyday people are frozen out. School lunches? Unaffordable. Student debt cancellation? Inconceivable. Help for the hundreds of thousands of NYC schoolchildren whose schools are facing a $469m hack-and-slash attack? That's clearly impossible:

https://council.nyc.gov/joseph-borelli/2022/09/06/nyc-council-calls-for-mayor-adams-doe-to-fully-restore-469m-in-school-funding/

When it comes to helping everyday people, American elites and their captured champions in the US government have minds that are so rigid and inflexible that it's a wonder they can even dress themselves. But when the fortunes and wellbeing of the wealthy and powerful are on the line, their minds are *so* open that some of their brains actually leak out of their ears and nostrils:

https://pluralistic.net/2023/03/15/mon-dieu-les-guillotines/#ceci-nes-pas-une-bailout

Every bank merger is supposed to come with a "public interest analysis." But these analyses are "perfunctory." They needn't be:

https://openyls.law.yale.edu/bitstream/handle/20.500.13051/8305/Kress_Article._Publication__1_.pdf

First Citizens got a hell of a bargain: it paid *zero dollars* for SVB's assets, its deposits and its loans. Any losses it incurs from its commercial loans over the next five years will be paid by the FDIC, no questions asked. The inability of regulators to convince First Citizens to assume SVB's community obligations along with those billions in public largesse speaks volumes.

Meanwhile, SVB's shareholders continue to claim that their headquarters are a relatively unimportant office in Manhattan, and not their glittering, massive corporate offices in San Jose, as part of their bid to shift their bankruptcy proceeding to the Southern District of New York, where corporate criminals like the Sackler opioid family have found such a warm reception that they were able to escape "bankruptcy" with billions in the bank, while their victims were left in the cold:

https://pluralistic.net/2023/03/18/2-billion-here-2-billion-there/#socialism-for-the-rich

Contrary to what SVB's apologists think, the case against them isn't driven by spite - it's driven by *fury*. America's "socialism for the rich, rugged individualism for the poor" has been with us for generations, but rarely is it so plain as it is in this case.


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🧓🏻 Hey look at this

* Why Interoperability Would Boost Digital Competition | Chicago Policy Review https://chicagopolicyreview.org/2023/04/12/cory-doctorow-on-why-interoperability-would-boost-digital-competition/

* Ripping Off the Invisible Straitjacket https://prospect.org/economy/2023-04-14-ripping-off-invisible-straitjacket/

* Enshittification, accounting… and email? https://rinesi.substack.com/p/enshittification-accounting-and-email

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🧓🏻 This day in history

#20yrsago GM apologizes for “freaks and weirdos ride the bus” ads https://craphound.com/GMresponse.pdf

#20yrsago How GM destroyed America’s public transit https://www.trainweb.org/mts/ctc/ctc06.html

#15yrsago Oregon: our laws are copyrighted and you can’t publish them https://memex.craphound.com/2008/04/15/oregon-our-laws-are-copyrighted-and-you-cant-publish-them/

#15yrsago Ronald Searle’s original dark, weird and hilarious St Trinian’s comics https://memex.craphound.com/2008/04/15/ronald-searles-original-dark-weird-and-hilarious-st-trinians-comics/

#10yrsago Cops in Somerville, MA: “It would endanger the public to tell you what guns we have” https://www.muckrock.com/news/archives/2013/apr/12/muckrock-appeals-somerville-pd-records-denial/

#5yrsago When your dental insurer sends you a “free” Internet of Shit toothbrush https://wolfstreet.com/2018/04/14/our-dental-insurance-sent-us-free-internet-connected-toothbrushes-and-this-is-what-happened-next/

#5yrsago The US workforce is the most productive, best educated in history and unemployment is at an all-time low, but wages are stagnant https://www.theguardian.com/commentisfree/2018/apr/13/american-economy-wage-suppression-how-it-works

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🧓🏻 Colophon

Today's top sources: David Sirota (https://twitter.com/davidsirota/).

Currently writing:

* A Little Brother short story about DIY insulin PLANNING

* Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FIRST DRAFT COMPLETE, WAITING FOR EDITORIAL REVIEW

* The Bezzle, a Martin Hench noir thriller novel about the prison-tech industry. FIRST DRAFT COMPLETE, WAITING FOR EDITORIAL REVIEW

* Vigilant, Little Brother short story about remote invigilation. ON SUBMISSION

* Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION

* Spill, a Little Brother short story about pipeline protests. ON SUBMISSION

Latest podcast: Red Team Blues: Behind the Scenes with Wil Wheaton https://craphound.com/news/2023/04/02/red-team-blues-behind-the-scenes-with-wil-wheaton/

Upcoming appearances:

* Antitrust and Competition Conference - Beyond the Consumer Welfare Standard (Chicago), Apr 20-21
https://www.chicagobooth.edu/research/stigler/events/2023-antitrust

* Red Team Blues at Mysterious Galaxy (San Diego), Apr 25
https://www.mystgalaxy.com/event/42523Doctorow

* Red Team Blues at Dark Delicacies (Burbank), Apr 26
https://www.darkdel.com/store/p2873/Wed%2C_Apr_26th_6pm%3A_Red_Team_Blues%3A_A_Martin_Hench_Novel_HB.html#

* Red Team Blues at SFPL with Annalee Newitz (San Francisco), Apr 30
https://sfpl.org/events/2023/04/30/author-cory-doctorow-red-team-blues

* Bay Area Bookfest (Berkeley), May 6/7
https://www.baybookfest.org/session/cory-doctorow/

* Open Source Summit (Vancouver), May 10
https://events.linuxfoundation.org/open-source-summit-north-america/

* Massy Books Red Team Blues event with Sean Cranbury (Vancouver), May 10
https://www.eventbrite.ca/e/red-team-blues-cory-doctorow-in-conversation-with-sean-cranbury-tickets-608877016547

* Wordfest (Calgary), May 11
https://wordfest.com/2023/event/wordfest-presents-cory-doctorow/

* Gaithersburg Book Festival, May 20
https://www.gaithersburgbookfestival.org/featured_author/cory-doctorow/

* Public Knowledge Emerging Tech keynote (DC), May 22
https://www.eventbrite.com/e/emerging-tech-tickets-600582126307

* WEPFest with Ron Diebert, Dave Bidini and Nancy Olivieri (Toronto), May 23
https://www.westendphoenix.com/shop/wepfest-spring-fundraiser

* Red Team Blues event with Tim Harford (Oxford), May 29
https://www.eventbrite.co.uk/e/cory-doctorow-red-team-blues-with-tim-harford-tickets-574673793787

* Red Team Blues event with Christian Reilly (Nottingham), May 30
https://www.waterstones.com/events/an-evening-with-cory-doctorow/nottingham

* Red Team Blues event with Ian Forrester (Manchester), May 31
https://www.waterstones.com/events/in-conversation-with-cory-doctorow/manchester-deansgate

* UCL Peter Kirstein Lecture, Jun 1 (London):
https://www.eventbrite.co.uk/e/peter-kirstein-lecture-2023-featuring-cory-doctorow-registration-539205788027

Recent appearances:

* Examining capitalism's chokepoints (Changelog)
https://changelog.com/podcast/535

* Cory Doctorow knows why monopolies are killing art (Canadaland)
https://www.canadaland.com/podcast/bonus-cory-doctorow-knows-why-monopolies-are-killing-art/recent

* Against Enshittification (Trashfuture):
https://trashfuturepodcast.podbean.com/e/against-enshitification-feat-cory-doctorow/

Latest books:

* "Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com

* "Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The *Washington Post* called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html

* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59 (print edition: https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)

* "Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html

* "Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.

Upcoming books:

* Red Team Blues: "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books, April 2023

* The Internet Con: A nonfiction book about interoperability and Big Tech, Verso, September 2023

* The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023

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