SVB Regulator Is a Woke Ideologue Who Knows Nothing About Risk Management

The Board of Governors of the Federal Reserve certainly deserves blame for the Fed’s failure to regulate Silicon Valley Bank (SVB). Responsibility should begin with Fed Chair Jay Powell and his Vice Chair for Supervision, Michael Barr. Both should resign or be removed from office for this $200 billion fiasco that has furthermore revealed that $3 trillion in government securities held by member banks are underwater by over $650 billion.

Still, the responsibility lies ever closer to home than in Washington, DC. The Fed is a system of twelve regional Federal Reserve Banks around the country reporting to the Board in Washington. The regional bank responsible for the regulation of SVB is the Federal Reserve Bank of San Francisco.

It may come as no surprise that one of the members of the Board of Directors of the San Francisco Fed was Greg Becker, who happened to be the CEO of Silicon Valley Bank. Nice.

In San Francisco, you get to regulate yourself. It gets worse.

The president of the San Francisco Fed is Mary Daly. In that position, she makes $422,000 per year. Qualifications? As described in this article, she was a high school dropout who worked in a donut shop before getting her GED (a high-school equivalency certificate). She entered college and fell under the sway of Marxist Professor Gene Wagner. Daly said the Marxist “mentored me my whole life.”

Daly later got a Ph.D. in economics and became a “labor inequality researcher.” From there, she ingratiated herself with Janet Yellen (another labor economist who knows nothing about monetary economics), and the rest is history.

Mary Daly has no expertise in banking or risk management. She is highly interested and involved in climate change, George Floyd, Black Lives Matter, LGBTQ+ rights, Pride month, and other woke social justice issues. She proclaims she’s the first openly gay president of a Federal Reserve bank as if that had anything to do with banking.

In 2021 she said, “I am not thinking that we have unwanted inflation around the corner. I don’t think that’s a risk.” When the inflation arrived soon after, she said, “I don’t feel the pain of inflation. … I don’t find myself in a space where I have to make trade-offs.”

Well, I suppose that’s true if you make $422,000 per year. Can government regulation get more incompetent? Actually, yes.

When Lael Brainard moved from the Fed board to the White House recently, that opened up a vacancy on the Fed’s Board of Governors. Daly was on Biden’s shortlist to be nominated to fill that vacancy. That way, her incompetence would not be limited to San Francisco but could infect the entire banking system.

There are many reasons to abolish the Fed. Mary Daly’s gross incompetence can be added to the list.

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