Retoot: Understanding the Conflagration in the Middle East

Also testing how easy it is to "retoot" a post from my Mastodon account to my blog, ala what Dave Winer does so well.

Out With the Old, In With the New

In the news today, former vice president Mike Pence has suspended his campaign for president. The longtime evangelical, who arguably should have garnered the support of the evangelicals who elected President Trump to office, never gained a following. His obsequious support of the former president — up to the point of refusing to violate his oath of office on January 6 — was seen by the base as a betrayal, not an act of allegiance to the U.S. Constitution. Pence was too much of a loyal milquetoast who betrayed Trump when it truly mattered. The MAGA base remains committed to the former president, despite the numerous indictments, violations of the norms of office, and lack of human decency.

As Mike Pence exits stage right, Mike Johnson enters stage left, elected this week to serve as the Speaker of the House replacing ousted Kevin McCarthy. The relatively unknown representative from Louisiana, who was only elected in 2016, distinguished himself by opposing the certification of the 2020 election, in the House on January 6 and earlier lawsuits filed in various states.

An evangelical and MAGA conservative, Johnson

supported bills that would institute a nationwide ban on abortion, and advocated for overturning the 2015 U.S. Supreme Court decision Obergefell v. Hodges, which affirmed a fundamental right for same-sex couples to marry. (Source: Wikipedia)

Announcing his decision to withdraw from the 2024 presidential race, Pence urged a gathering of Jewish Republicans to choose a Republican candidate that will

“appeal to the better angels of our nature, and not only lead us to victory, but lead our nation with civility back to the time-honored principles that have always made America strong and prosperous and free.”

Despite Pence’s wish and personal efforts, it seem likely that Trump will be the Republican candidate, and Johnson will be leading the House when the time comes to certify the 2024 election. I hope it’s not close.

Mike Pence (left) and Mike Johnson (right).

Reflections on 9/11: What Have We Learned?

“Some things cannot be fixed; they can only be carried.” — Megan Devine

I delivered this reflection at the Auburn Unitarian Universalist Fellowship service on September 10. The proximity of the service to 9/11 called for a commemoration of the tragedy and its continuing echoes. Collecting my thoughts from over two decades was an instructive exercise, an example of William Faulkner’s quip, “I never know what I think about something until I read what I've written on it.”

§

T

omorrow will be the 22nd anniversary of 9/11, the audacious and traumatic attack on America by al-Qaeda. We’re approaching a generation since that day. While the physical destruction has been cleared, new buildings constructed, the Pentagon repaired, and memorials erected, the emotional scars remain. In the words of Megan Devine, “Some things cannot be fixed; they can only be carried.”

The echoes of 9/11 persist. This morning I want to share my reflections on a few of the many.

John Ogonowski and his family — wife Margaret and daughters Laura, Caroline, and Mary Catherine — lived on a 150 acre farm in Dracut, Massachusetts, not far from where John was raised. Beyond raising crops — hay, corn, pumpkins, blueberries, and peaches — he was known for promoting farming in Massachusetts and helping Cambodian farmers who had settled in the area after the Vietnam War.

9/11 dawned a crisp fall morning, with not a cloud in the sky. I recall that morning, as I lived in nearby New Hampshire. John Ogonowski was up early to drive to Logan Airport. In addition to farming, he was a pilot for American Airlines, scheduled to captain a Boeing 767 from Boston to LAX. He and First Officer Thomas McGuinness were among the first to die, possibly before their plane struck the north tower.

John’s daughter, Laura, was 16, just starting her junior year in high school. She was in class that morning. A teacher led her out into the hallway and, as she recalls, said, “Laura your father was killed in a plane crash.”

“Watching the plane fly into the World Trade Center towers was, and still is, the most horrific thing to see,” she says. “That day that started out so bright and crisp turned out to be the darkest day of my life.”

The Ogonowski family turned their grief toward memorializing John’s love of farming. And trying to resume their lives. John’s widow says, “There’s just this undeniable void. They took a person bigger than life, and he disappeared in a heartbeat.”

John Ogonowski was one of the 2,977 people who died at the World Trade Center, the Pentagon, and in an open field near Shanksville, Pennsylvania. They ranged from 2 to 82 years old and came from some 102 countries. The medical examiner staff of New York City continues to identify the remains of victims using DNA samples. As of two years ago, some 1,100 people had not been identified, their families waiting for closure.

Some 71,000 individuals who responded to the destruction at Ground Zero and were exposed to the smoke and dust and trauma, suffer physical and mental health illnesses. More than 300 fire fighters have died from illnesses attributed to their exposure in the aftermath.

Another echo from 9/11: The failures in security that allowed the 19 hijackers to pull off 9/11 led to the formation of the Homeland Security Administration and the Transportation Security Administration, dampening the fun of air travel, likely forever. Our airports have been restructured into people chutes, so TSA can assess each one of us as a possible threat.

After an intense 10-year hunt, the U.S. finally found Osama bin Laden, the leader of al-Qaeda, and killed him in a surgical strike. While that brought some sense of justice, al-Qaeda remains active in the world. It took the U.S. another decade to find Ayman al-Zawahri, who took over the leadership after bin Laden’s death.

The U.S. government had demanded that the Taliban leadership of Afghanistan turn over bin Laden. After the Taliban refused the ultimatum, President Bush ordered an invasion of the country to capture the elusive leader. Bin Laden escaped, leaving the U.S. with a misguided and unsuccessful attempt to turn the country into a peaceful democracy. After nearly 20 years of what became known as the “forever war,” the U.S. hastily and chaotically withdrew from Afghanistan, leaving the Taliban in control. Other than the destruction of war, the U.S. presence in the country disappeared like an oar lifted from the water.

Yet our vengeance echoes with deaths and injuries. During the two decades, 2,462 U.S. military and 1,822 civilian contractors died. Almost 21,000 service members were wounded. The Costs of War Project estimates at least 176,000 Afghans were killed, comprising civilians, Afghan military and police, and opposition fighters.

One short-lived success of the U.S. occupation: Afghan women gained many freedoms: going to school, working, and participating in government and public life. Tragically, the Taliban quickly reimposed its patriarchal interpretation of Islamic law, leaving only memories of those freedoms.

Another echo: As the U.S. sought the perpetrators of 9/11, it established a military prison at the isolated Guantánamo Bay Naval Base. The secluded location was outside the sovereign territory of the U.S., enabling the Bush administration to argue that detainees did not have the rights and protections of the U.S. legal system. Further, the island location made it unlikely any of the prisoners could escape to threaten U.S. citizens.

The New York Times reports 780 people were detained at Guantánamo since January 2002. 30 are still there, five accused of plotting the 9/11 attacks. The trial of the five has been stalled for years because each was tortured by the CIA. Torture undermines confessions and other evidence that would be presented at a trial.

Prosecutors have proposed a plea deal, where the defendants admit guilt in exchange for life sentences. The five have agreed to that point, also asking to serve their terms where they can eat and pray together, which they do now. They fear being isolated in solitary confinement for the rest of their lives. They have also asked for medical treatment for the sleep disorders, brain injuries, gastrointestinal and other health problems which they attribute to repeated torture. Last week, President Biden rejected those requests.

Three of the 30 prisoners at Guantánamo are being held in a category called “indefinite law of war detention.” They live in a Kafka-esque world where the U.S. keeps them imprisoned as a “national security necessity,” not eligible to be transferred to another country. Yet they have not been formally charged with any crimes and may never be.

Another echo: 9/11 launched a wave of anti-Muslim attacks in the U.S.: verbal and physical assaults, murders, vandalism of mosques and personal property. Donald Trump used anti-Muslim bias as a pillar of his 2016 campaign for the White House. After being elected, his proposed policies were slowed only by the courts. Islamophobia remains a simmering part of American culture, resurgent with the rise of Christian Nationalism.

§

These echoes continue to reverberate 22 years after 9/11. Sitting with them is heartbreaking. As a nation that calls itself religious, what should we learn from this past?

First, we should never forget the evil perpetrated that morning. For those of us who witnessed it, the trauma surfaces every 9/11, every time we see a photo or video from that day or its aftermath. So many innocent lives were lost, causing unfathomable pain for those who loved them. “Some things cannot be fixed; they can only be carried.”

Second, our military forces are most effective deterring the aggression of other countries. Our military is a blunt instrument of destruction when used offensively, leading to tragic civilian casualties. An initial welcome by civilians usually turns to resentment and a guerrilla war.

Third, regardless of our intentions, an American occupation cannot create a democracy with enlightened human rights where the history, culture, and religious traditions of the country won’t nurture those seeds.

Fourth, torture and interminable detention are appalling violations of human dignity. Our first principle calls us to respect the inherent worth and dignity of every person, and those words reflect the values of religious people and the foundation of our Constitution.

Last, and most pertinent for us, our Muslim neighbors remain targets of bias. This is likely to become more threatening and visible with the hateful rhetoric of the upcoming presidential campaign.

22 years after 9/11, it’s easy to be so busy with life that we lose track of these continuing echoes. On this anniversary, let us remember we are called to turn our faith into action and to engage in the political process, doing what we can to right the wrongs that still echo from 9/11. In the words of Martin Luther King, Jr., “The ultimate tragedy is not the oppression and cruelty by the bad people but the silence over that by the good people.”

§

As I researched and wrote this homily, I found the message depressing. Being an optimist, I want to end on a hopeful note.

Likely, you have heard the story told by Mr. Rogers: “When I was a boy and I would see scary things in the news, my mother would say to me, ‘Look for the helpers. You will always find people who are helping.’ To this day, especially in times of ‘disaster,’ I remember my mother's words, and I am always comforted by realizing that there are still so many helpers — so many caring people in this world.”

We can’t tell the story of 9/11 without recounting so many acts of bravery and selfless kindness. Here’s one:

That morning, the FAA ordered all aircraft in U.S. airspace to land, to determine whether other planes had been hijacked and were heading for destruction at unknown locations. There were many flights coming from Europe that were too close to the U.S. to return to Europe. 38 planes carrying some 6,600 passengers and crew landed at the airport in Gander, Newfoundland, which had a very long runway but a population of just 9,000. The residents there rallied to feed and house their stranded visitors until their flights were cleared to return to the U.S.

Victoria’s song this morning, from the musical “Come From Away,” shares the story of Beverly Bass. She was an American Airlines captain flying from Paris to Dallas-Fort Worth that day. “Come From Away” tells of the goodness and generosity of the Canadian community that responded to the tragedy.

With the vision of peace for a hurting world, let’s join our voices to sing our closing hymn, “Imagine” by John Lennon.

Alabama's Republican Legislators: Obtuse, Recalcitrant, Afraid?

Alabama's legislature recently concluded a special session to redraw Alabama's congressional districts mandated by the federal courts — including a 5–4 decision from the U.S. Supreme Court.

In a state where 27 percent of the residents are Black, the federal government argued — and the argument was supported by the courts — that more than one of the seven congressional districts should be expected to elect a Black representative. Not so. Historically, only one district was configured to elect a Black representative, which the federal government viewed as a violation of the Voting Rights Act.

Agreeing with the federal government, the court ordered the legislature to create

“an additional majority-Black congressional district, or an additional district in which Black voters otherwise have an opportunity to elect a representative of their choice.”

Providing further guidance, the judges wrote,

"As the Legislature considers such plans, it should be mindful of the practical reality … that any remedial plan will need to include two districts in which Black voters either comprise a voting-age majority or something quite close to it."

The legislature's solution, according to the Alabama Reflector:

GOP maps created a new 7th Congressional District in the western Black Belt with a bare majority of Black voters (it ended up at 50.65 percent) and a new 2nd Congressional District in southeast Alabama with a Black population that ranged from 38 to 42 percent.

Rep. Chris Pringle, R-Mobile, who co-chaired the reapportionment committee, said while the district wasn’t majority-Black, Black voters would have the "opportunity" to elect leaders of their choice, according to the Alabama Reflector.

Opportunity doesn't mean the outcome is likely. I can buy a lottery ticket, with the outcome most assuredly the opposite of what I hope. A population that's 38 to 42 percent hardly meets the criteria of "a voting-age majority or something quite close to it."

So it's back to court, the Alabama legislature wasting taxpayer money to defend Jim Crow.

However, my assessment may be too harsh. A thought experiment written by Brian Lyman posits the legislature may be motivated more by the fear of retribution from their hard-core voters than racial bias.

Regardless, Alabama's racial infamy lives on.

Trump Indicted, No Surprise

For the first time in U.S. history, a former president has been indicted on a criminal charge: on Tuesday, Donald Trump was officially charged with 37 counts related to keeping classified documents after his term ended, then obstructing justice by his efforts to keep the documents after ample opportunity to return them.

This first for American democracy should be stunning. Yet it’s no surprise. It’s just another dot on a very straight line drawn by the most observed, analyzed, and polarizing person in, perhaps, all of U.S. history. A human who, to me, is the antithesis of the values and norms that inspire this country — or did until Donald Trump came down the escalator to announce his presidential campaign.

What does stun me is the abject support from most leading Republicans — ironically, even those competing with Donald Trump for the Republican nomination for the 2024 election. They echo Trump’s preposterous claims of witch-hunt, judicial overreach, and persecution by the Biden administration, ignoring the photos and other compelling circumstantial evidence in the indictment. Our elected officials should let the judicial process proceed and refrain from adding political rhetoric to inflame an already historic and volatile situation.

Photo of classified documents stored in a bathroom at Mar-A-Lago. Source: Department of Justice

In addition to stunned, I’m disheartened by the values reflected by Republicans’ continued fealty to Donald Trump, despite his immorality and continuous lies, which led to his unprecedented attempt to prevent Joe Biden from assuming the presidency. Certainly a large number of Americans voted for Donald Trump. Many apparently believe his false claims of election fraud, some enough to storm the Capitol on January 6. But for the Republican leaders of our government to support Trump’s propaganda seems a clear violation of the oath of office to uphold the Constitution.

Coach Tuberville’s Latest Football

Senator Tommy “Coach” Tuberville, who sits on the Senate Armed Services Committee, has stopped the Senate’s confirmation of general and flag officer nominations and appointments, claiming the Department of Defense (DoD) policy funding travel and paid time off for service members having an abortion is illegal. So far, the Senator’s hold has caught more than 180 nominations, according to al.com.

In an op-ed article in The Washington Times, Tuberville argues

“Congress writes the laws, and Congress directs all federal spending,” saying, “Nobody in Congress voted for this.”

Lloyd Austin, the Secretary of Defense, says the DoD policy is legal. At a Senate hearing he said,

“About one in five of our troops are women. I want them focused on the mission and not worried about whether or not they’re going to have access to reproductive health care.”

The DoD policy was implemented in response to the Supreme Court’s decision in the Dobbs v. Jackson case, which overturned the 1973 Roe v. Wade decision. Roe said a women had the right to an abortion under the Constitution (with certain restrictions). The Dobbs ruling reversed that decision, saying no such right is explicitly defined in the Constitution. Where do you see the word abortion? The outcome of Dobbs is that legal access to abortion is determined independently by each state. Many states essentially prohibit all abortions.

The conundrum is we have troops based in all states, as well as around the globe. To prevent a two-tiered military, this DoD policy provides consistent access to reproductive health care. Unfortunately, some women will have to travel outside the states where they are based, so the policy grants them time off and reimburses travel expenses — which the Coach objects to because he is against abortion.

Another letter:

Senator Tuberville,

I write to express my disagreement with your policy of blocking military confirmations because of your opposition to the Pentagon’s medical policies, which include leave and travel for service members who have an abortion.

While I understand and respect your personal beliefs on abortion, enforcing your beliefs on all women serving in the U.S. military is an abuse of your power as a Senator and a violation of the separation of church and state, which is enshrined in the Bill of Rights.

Your religious beliefs on abortion are not shared by all Americans, even Christians. A Pew Research Center survey conducted one year ago found 61% of Americans feel abortion should be legal in all or most cases, compared to 37% holding your view.

Memorial Day is a fitting time for you to lift your hold and let the military proceed without further unwarranted delay.

Heading Toward a Crash with the U.S. Debt Ceiling

The latest estimate by Treasury Secretary Janet Yellon forecasts the U.S. government hitting the debt ceiling — unable to incur any further debt to make payments — as early as June 1. Despite approving increases during the Trump administration, the House has tied this increase to a long list of spending cuts, reducing spending for most federal programs to the levels two years ago, according to NPR.

Disguised as concern for America's fiscal future, the House gambit is taken from classic Republican orthodoxy: cut spending except for defense and lower taxes, ignoring that the latter will actually increase the debt.

There's another dimension to this looming crisis, that of speaker Kevin McCarthy held hostage by the most conservative members of his caucus, forcing him to play a no compromise hand. Such is the price of his power.

Hard to say if rationality will prevail or we'll hit the ceiling and hope for the best. Nonetheless, it seemed prudent to reach out to my representative in the House, Mike Rogers:

Representative Rogers,

I urge you to approve an increase in the debt ceiling before the U.S. government defaults on any of its obligations. A default would be a first for the country, a self-inflicted error with unpredictable consequences for our credit rating and global financial markets.

As Jerome Powell said yesterday, “No one should assume that the Fed can protect the economy and financial system and our reputation from the damage that such an event might inflict.” A default could upend the Fed’s measured interest rate strategy to reduce inflation without incurring a recession.

As you well know, the debt ceiling simply reflects the approved spending of past sessions of Congress, Republicans as well as Democrats. Refusing to honor those debts is like me refusing to pay my credit card bill. The appropriate action for me is to reduce future charges to my credit card. The same holds for Congress.

The increasing federal debt is a longterm economic concern and should be addressed by Congress through its appropriations process. The list of spending cuts recently approved by the House is a starting point for negotiating the fiscal 2024 budget with the Senate.

The current strategy of tying a long list of wished for spending cuts to the debt ceiling in a political competition has way more downside than the outcome of reducing federal spending.

President Biden, Too Old To Run Again?

This week President Biden announced he’s running for a second four-year term, urging “let’s finish this job.”

The video announcement made official what was expected, so the news has focused on the president’s low standing in the polls and his age — born in 1942, Biden will be 86 at the end of a second term.

My take: based on his decades of experience in government, life experience, and good health, Joe Biden is the most qualified to serve as president, certainly far better than his leading and likely opponent, former president Trump.

Should ill health or death prevent Biden from completing the term, Vice President Kamala Harris will step in, with more than four years in the administration in addition to her experience in the Senate. This twist of history would be far better for the country than another four divisive years of a Trump administration.

In addition to supporting a second term for President Biden, I hope the Democrats will retain their majority in the Senate and regain the majority in the House so the administration can, indeed, finish the job. The Democrat’s vision for the country is far more inclusive and inspiring than the vision and policies I’ve heard from Republicans.

Alabama Governor Kay Ivey Apparently Feels Empathy is a “Woke” Concept

Hard to believe how absurd and damaging “anti-woke” politics has become.

Governor Ivey,

I am dismayed that you asked — forced according to the Alabama Reflector — the secretary of early childhood education to resign because of her support of a resource for educators, a book your communications director said included “woke concepts.”

First, the term “woke” should be banished from any government communication. It’s a pejorative, inflammatory political term that plays to your conservative base and precludes a thoughtful, reasoned discussion of any legitimate concerns about the book published by the National Association for the Education of Young Children (NAEYC).

Second, the NAEYC is a respected organization, formed in 1926, that helps educators and schools create a supportive learning environment for children through age 8. NAEYC’s policies and recommended practices are based on decades of research. 25 years ago, the preschool my two children attended was accredited by NAEYC after a rigorous audit to assure the school’s program was appropriate for their stages of development.

Third, it’s so important that young children begin developing socialization skills: seeing that everyone is different, learning that each person deserves respect, and beginning to feel empathy for the other. According to the Alabama Reflector, your office received a complaint about the NAEYC book, claiming it teaches “white privilege, structural racism and messaging promoting ‘equality, dignity and worth’ around LGBTQIA+ identities.” If that was indeed the complaint, it’s a gross distortion that mirrors the bias, fear, and political agenda of the person making the complaint.

An actual passage from the book encourages teachers “to be particularly aware of providing supporting environments and responses to children who are members of marginalized groups and those who have been targets of bias and stereotyping.” Bullying based on perceived differences — gender, racial, ethnic, language, economic, academic, athletic — is a significant issue in our schools, with potential outcomes that increase in severity as children progress from preschool through high school. Telling teachers to ignore the innate diversity of our children won’t solve these issues and yield a more civil society.

Last, I’m confident all parents want their children’s teachers to see and encourage their uniqueness, helping them gain the confidence to pursue their potential. That’s the vision promoted by the NAEYC and what makes this complaint of “wokeness” — which is counter to acceptance and encouragement — so perplexing.

Perhaps you reacted to the word reflexively, not looking beyond the term to see the accusation as the unfair and fearful political play it is. Unfortunately, Alabama has lost Ms. Cooper’s talent and devotion to our children.

Former President Trump Indicted By Grand Jury For Hush Money Payment During 2016 Campaign

The lede from The New York Times story reads

"A Manhattan grand jury indicted Donald J. Trump on Thursday for his role in paying hush money to a porn star, according to people with knowledge of the matter, a historic development that will shake up the 2024 presidential race and forever mark him as the nation’s first former president to face criminal charges."

The specific charges aren’t yet known, just that they relate to “hush money” paid to Stormy Daniels, who alleges she had an affair with Donald Trump.

The Washington Post reports Republican leaders are rallying around Trump, calling the indictment politically motivated. Mike Pence, the former vice president, said on CNN,

“I think the unprecedented indictment of a former president of the United States on a campaign finance issue is an outrage. This will only further serve to divide our country.”

Pence is right, this will further divide the country. But it would in either case, as many would like to see Donald Trump indicted.

On his outrage, how can anyone conclude it’s an outrage if we don’t yet know the specific charges?

Are Republicans arguing a hush money payment disguised as legal fees isn’t serious enough to warrant indicting a former president? That is certainly consistent with dismissing the impropriety of Trump’s call to Ukraine’s president and his role in the attempted insurrection on January 6. If neither warranted convicting the impeached president, why prosecute a candidate for hiding a modest $130,000 payment?

Unfortunately, the Republican rationale reinforces the unfortunate reality that the application of the law seems inversely proportional to the financial wealth and stature of the defendant.

As this indictment comes from a grand jury through a district attorney — a district attorney whose career will be torpedoed for flimsy charges that a jury would quickly dismiss, there’s probably something there.

So quiet on the set. Let’s await the specifics and let the legal process play out.

The Greatest U.S. Blunder of My Lifetime: The Invasion of Iraq

T

he U.S. invasion of Iraq, predicated on Saddam Hussein secretly developing weapons of mass destruction (WMD), started 20 years ago today, on March 20, 2003.

I recall landing at LAX that night, walking through the terminal and seeing images from CNN: dark skies over Baghdad lit up with tracers from anti-aircraft guns and explosions from U.S. bombs.

Colin Powell had convinced me, in his speech to the United Nations Security Council, that we had intelligence confirming WMD, which justified invading and toppling Hussein.

That proved false. But his other prediction, “If you break it you own it,” played out tragically, not ending after America’s official withdrawal in 2011. Echoes of the war will span generations, as poignantly told in this reflection by Lulu Garcia-Navarro.

In an article in The New York Times, Peter Baker assesses former President Bush’s perspective about the invasion of Iraq:

As far as he is concerned, the world is better off without Saddam Hussein, and he has told advisers he has not changed his mind about that.

Perhaps. But was it worth the carnage?

The invasion succeeded in toppling Mr. Hussein, by all accounts one of the world’s most brutal dictators, but touched off a virulent insurgency and relentless sectarian civil war that ultimately killed 4,600 American troops and 3,650 contractors, at least 45,000 members of the Iraqi military and police, at least 35,000 insurgents and an estimated 200,000 civilians.

I hold fromer President George Bush and former Vice President Dick Cheney — a strong advocate for the invasion — responsible for the greatest blunder in U.S. policy during my lifetime. Aside from any guilt they may silently carry, only God can hold them accountable when they pass from this life.

The Failure of Silicon Valley Bank

A run on Silicon Valley Bank (SVB) late last week — when account holders started withdrawing money, fearful that the bank didn’t have sufficient funds to honor their requests, thus fulfilling their fears that the bank would not have the funds to cover all withdrawals — led to the bank’s collapse, the second largest bank failure in U.S. history according to NBC News.

U.S. regulators stepped in, spending the weekend developing a plan to protect all deposited funds, even those exceeding the $250,000 guaranteed by the Federal Deposit Insurance Corporation (FDIC).

The SVB of last week is no more, replaced by a “bridge bank” with a new CEO:

Silicon Valley Bridge Bank, N.A. is a new bank that is regulated by the Office of the Comptroller of the Currency. Silicon Valley Bridge Bank, N.A. has fully stepped into the shoes of the former Silicon Valley Bank. — Company News, March 14

SVB’s prior management has no bank to manage, only management questions to answer and tarnished reputations to defend.

The demise of this regional bank, which catered to VCs and their startup companies, unleashed debates about the cause of the collapse and whether the government’s move to protect depositors was a “bailout,” a term that became a pejorative following the Great Recession of 2008. Some argue the FDIC ceiling should not have been raised — don’t protect those rich VCs from moral hazard. Some have inferred that the bank’s failure reflected the higher risk of the startup companies it served.

I think both conclusions are unwarranted. From the varied news reports and opinions I’ve read and heard, I’ve concluded the following:

What Triggered the Run?

Probably to minimize risk and adhere to regulatory requirements, SVB invested some of its deposits in long-term U.S. Treasury bonds. As the Federal Reserve raised interest rates to reduce inflation, the lower yields of SVB’s bonds became a liability: investors could buy Treasury bonds at higher yields than those held by SVB. Faced with a threatened downgrade by Moody’s and depositors withdrawing funds, the bank moved to sell $21.4 billion in bonds — taking a loss of $1.8 billion. That spooked the market and accelerated the run to withdraw funds, which the bank simply couldn’t fulfill. Too much, too fast.

The post mortem on the collapse must determine whether SVB understood its increasing vulnerability as the Fed repeatedly raised interest rates. If so, did it assess the probability of a run, perhaps judging it too low to require action? The threat of Moody’s downgrading SVB apparently prompted management to act, but its options were limited, as it was boxed in by the difference in yields between the bonds it held and current rates.

Making this autopsy more interesting, regulations for mid-sized banks like SVB were relaxed by Congress in 2018, with the bank’s CEO, Greg Becker, an outspoken advocate for looser regulations. Would the previous regulations have prevented SVB’s failure? Or identified the vulnerability in time to address it before the bank run and subsequent collapse?

Coincidentally, the CEO exercised options to buy and sell 12,451 shares of the bank on February 27. Daniel Beck, the CFO, sold 2,000 shares the same day. Both transactions were apparently prescheduled under a 10b5-1 insider trading plan, so they may not indicate that the executives anticipated the failure and sought to enrich themselves. Investigations by the SEC and Justice Department will provide more insight and, hopefully, prosecution if warranted.

Saving the Depositors

Addressing the brouhaha over the $250,000 FDIC insurance limit (per customer per account), let’s start by not equating a checking or savings account as an investment. A key element of a bank’s mission is to provide a safe haven for depositors, one less source of financial risk.

Presumably, many of the accounts at SVB were with businesses, many with multi-million dollar cash flows for staff, supplies, finished goods, capital expenditures, etc. Losing these funds because a company’s account balances exceed the FDIC limit would impair company operations, perhaps catastrophically. Increasing the FDIC limit seems a prudent step to protect the companies and all those who support their operations — none guilty of making a reckless investment.

As the FDIC insurance pool is funded by the banks, not taxpayers, it can be considered a cost of doing business, an investment to ensure public confidence in the banking system.

In the few days since SVB’s collapse, I’m reading of an influx of deposits in big banks such as Bank of America and Citibank, reflecting uncertainty about the security of funds held at regional and local banks. For most individuals, the $250,000 FDIC insurance will be sufficient; however, for companies with larger deposits in checking or savings accounts, increasing the limit seems appropriate and consistent with the goal of a secure banking system.

The FDIC was formed by Congress in 1933. Let’s see if the current recalcitrant Congress will move beyond rhetoric to increase insurance coverage and tighten the regulations to address the root causes of SVB’s failure.

Update: March 18, 2023

Apparently no white knight will rescue SVB, as the parent SVB Financial announced it would file for Chapter 11 bankruptcy protection to sell off the assets of the core bank, although not the funds and general partner entities and SVB Securities.

Reuters reported SVB had only $2.2 billion in liquidity, compared to assets of $209 billion at the end of last year. What a fall.

Dishonoring Rev. Dr. Martin Luther King Jr.

Last week the country honored the Rev. Dr. Martin Luther King Jr.’s life and legacy, lamenting his tragically shortened life and yet unfulfilled promise of racial equity. The same day as the Martin Luther King Jr. holiday, Alabama and Mississippi memorialized Robert E. Lee’s birthday, state holidays dating from the late 1800s.

Perhaps a Robert E. Lee holiday in the decades post-Reconstruction, when the South was building Jim Crow to undermine the outcome of the Civil War, is understandable. By the 1960s, however, these Confederate celebrations were clearly antithetical to the values of racial equity raised by the Civil Rights movement, hopefully mirrored in the social evolution of the country.

Yet the Robert E. Lee holidays have remained on the calendar, incredibly paired with the MLK holiday in Alabama and Mississippi since it started in 1986. Alabama’s governor and legislature don’t seem bothered by the contradictory values, content to quietly honor the legacy of the Civil War and slavery.

As a new resident of Alabama, I’m appalled by the dissonance, which prompted a letter to the governor:

❝Dear Governor Ivey,

Before moving to Alabama a year ago, I was curious how I would find the state addressing its history of slavery, the Civil War, Jim Crow, and the Civil Rights era. I’ve found some hopeful signs, such as the effort to amend the state constitution to delete racist language. However, I’m appalled that the state has a holiday memorializing Robert E. Lee’s birthday. Even worse, it’s the same day as the Martin Luther King Jr. holiday — which I interpret as a sophomoric and impudent attempt to negate the life and contributions of Rev. Dr. King.

Other than the symbolism of Jim Crow, Alabama honoring Robert E. Lee with a holiday surprises me. Lee had no tie to the state other than his military campaigns during the Civil War. Although the record shows he was conflicted by slavery, he fought to preserve it, leading many Confederate soldiers to their deaths under his command.

For Alabama to honor Lee and his legacy with a holiday is inconsistent with reconciling the state’s lamentable racial history. I urge you to use your last term as governor to remove this annual commemoration of the state’s racist past. You have the opportunity to articulate a vision of racial equity that respects all of Alabama’s citizens.

Respectfully,

Gary Lerude

Speaker of the House

After 15 ballots, untold contortions, genuflections, and compromises of his integrity, Kevin McCarthy finally achieved what he’s long coveted: becoming Speaker of the U.S. House of Representatives.

Reflected in the number of ballots, he also became leader of a group of recalcitrant and ungovernable Republican representatives — just one now able to call for a vote to oust the speaker. McCarthy will lead with a gun to his head.

In a speech to the chamber after finally securing the role he so desired, McCarthy said, “As Speaker of the House my ultimate responsibility is not to my party. Our responsibility is to our country.”

While their responsibility is to the country, McCarthy’s flip-flops and compromises have unfortunately ceded power to a small group of the most conservative members of the Republican party. Their agenda does not reflect and will not benefit the broad needs of the American people.

We can expect gridlock the next two years.