In the wake of the Silicon Valley Bank collapse, many are questioning whether the bank was distracted by woke policies over its core mission of protecting depositors’ money. A lot of evidence has already come to light that it did. We must also examine the role California Governor Gavin Newsom played in the bank’s demise.
Newsom championed the California rules that corporate boards must maintain a specified number of minorities, women, and LGBT, regardless of their qualifications. The first such law was passed in 2018, mandating that boards of six persons or more have at least three women. Despite the law’s purported goal of “diversity,” it permitted a board to consistent entirely of women.
A second mandate came down in 2020, signed by Newsom, requiring that a corporate board of nine or more members have a least three minorities or LGBT members. Again, the so-called diversity requirement is met even if the board consists, for example, entirely of gay Hispanic females. Also, neither law required that the members have any particular qualifications. The only qualification that mattered was the gender, race, or sexual orientation of the member.
The laws were separately struck down as violating the equal protection clause of the state constitution. They are discriminatory on their face. If you are a straight, white male, there are a limited number of board seats available. For all others, the number of seats is unlimited.
Despite the laws being struck down years after they passed, they had their intended effect. Corporations, including SVB, moved to comply with the laws. Last year SVB touted its board’s diversity, noting that 45 percent of its board are women, in addition to “other diversity” like “one black” member, and “one LGBTQ+.” (It’s worth noting the bank’s chief risk officer (CRO) was also female, and the head of financial risk management in the UK was a “queer” female.)
Were these board members minimally qualified? Since that was not a requirement, we cannot be sure. Were they the best qualified? Likely not, since the pool of applicants was restricted for these positions. Further, because of the law and other diversity requirements, these categories of people are in high demand, making it difficult to find highly qualified applicants.
Did the failure to exclusively hire the most qualified people lead to SVB’s demise? We do not yet know, but the ongoing investigations will likely be revealing. For instance, investigators want to know why the CRO position was open for nine months prior to a woman taking over in January. The prior CRO was also female. Did the position sit open longer because the board was intent on replacing her with another female?
Welcome to the new world, where questions about the effects of equity requirements will now be regularly asked whenever things go wrong. It is only natural when you abandon meritocracy and make race, sex, and sexual orientation more important than education, experience, and intelligence.
Illegal affirmative action, implemented through “diversity, equity and inclusion” officers in both the public and private sector, is now rampant in America. Thus, its role in bank failures, and a host of other failures, must be considered.
The Federal Aviation Authority is under scrutiny due to the spate of near collisions at airports. Our military faces scrutiny for its abysmal execution of the Afghanistan withdrawal. The East Palestine, Ohio train derailment, followed by the intentional destruction of hazardous materials, resulting in disastrous water contamination, has called into question the competence of the Transportation Department. Did equity and diversity in hiring play a role in these problems?
People can judge for themselves the impact of equity-based hires in evaluating the performance of the Vice President, who President Biden chose from an applicant pool he limited to just seven percent of the population.
I used to oppose affirmative action and equity because it was unfair to those who were better qualified, unfair to those in protected groups who did not need the affirmative action, and was just slapping a band aid on a problem without addressing root causes. But seeing it now implemented on a widespread, full scale, it actually has a far more insidious impact on all Americans.
The failure to simply seek and place the most qualified people in private and public sector positions has undoubtably reduced productivity, ingenuity, and success. And with organizations involved in health and safety, it has undoubtably caused unnecessary death and destruction.
The concern was highlighted very well by the nonprofit Citizens for Sanity. It asked in a recent ad, “Have you ever boarded a plane and thought to yourself, ‘I hope the pilot is a transgender refugee’?” Or “have you ever gone to the emergency room and said, ‘I hope my medical team is incredibly diverse?’” Or, “have you said, ‘I hope the police department hit its equity goals for the year’?”
Thanks to the SVB failure, we can now add, “Have you ever deposited money in a bank and said, ‘I sure hope the board is diverse and the risk manager is expert on LGBT issues’?”
