Doublethink – Philip Greenspun’s Weblog

How is First Republic Bank different from Silicon Valley Bank?

March 17, 2023 by philg

Readers: Please help me keep these bank failures straight. “First Republic Stock Plunges After Bank Rescue Plan, Dividend Suspension” (WSJ, today):

First Republic Bank shares fell more than 30% Friday after a multibillion-dollar rescue deal orchestrated by the biggest U.S. banks failed to convince investors that the troubled lender is on solid footing.

The move erased the gains that came Thursday, when a group of banks including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. deposited $30 billion in First Republic in an effort to restore confidence in a banking system badly battered by a pair of bank failures.

“It’s not clear whether it’s viable as a stand-alone entity,” said Julian Wellesley, global banks analyst at Boston-based Loomis Sayles & Co. “So it’s likely, in my view, to be taken over.”

The sudden collapse recently of Silicon Valley Bank and Signature Bank—the second- and third-largest bank failures in U.S. history, respectively—have sparked concerns that anxious customers could drain deposits from other small and midsize banks.

What do SVB and First Republic have in common other than both being supervised/regulated by the San Francisco Fed? Was First Republic as devoted to diversity and inclusion as SVB?

As Congress and the D.C. Fed flooded the U.S. with money in 2020, what was First Republic thinking about? “First Republic Expands Commitment To Diversity, Equity and Inclusion” (August 31, 2020):

First Republic has engaged Management Leadership for Tomorrow (“MLT”), a national nonprofit that equips and emboldens high-achieving Black, Latinx and Native American individuals to secure high-trajectory jobs, while partnering with employers to provide access to a new generation of diverse leaders. The organization’s advisory services help institutions to better foster an environment of success for the underrepresented colleague experience.

“A diversity of backgrounds, opinions and perspectives has always been fundamental to our success,” said Jim Herbert, Founder, Chairman, and CEO of First Republic. “Management Leadership for Tomorrow has a proven track record of success in helping companies find and develop leaders from underrepresented communities.”

Individuals who self-identify as members of ethnic minority groups currently total 48% of First Republic’s workforce, with over 55 languages spoken at the company. Building upon First Republic’s long-standing culture of inclusion and diversity, MLT will provide strategic and tactical support to help further diversify the company’s workforce. In addition, the organization will collaborate with First Republic to enhance colleague and culture development programs that drive a sense of belonging and engagement.

If we count employees identifying as “women” as being in a victimhood class and we consider these 48% who were victims via “ethnic minority group” identification, the majority of the bank’s employees were victims and yet the goal was apparently to go bigger in the victimhood department. Here’s the person who was CEO for 37 years, through 2022:

James Herbert was replaced, in the CEO/COO roles, by a diverse duo:

But what exactly did these diverse executives do to cause the meltdown? And why didn’t the San Francisco Fed notice anything amiss? Let’s check a 2018 New York Times article:

The Federal Reserve Bank of San Francisco has installed Mary C. Daly, a labor economist who currently serves as the head of research, as the institution’s new president beginning Oct. 1. … Ms. Daly, who is openly gay, will become the third woman among the 12 presidents of the Fed’s regional banks. As a senior executive at the San Francisco Fed, she has been a leading voice for addressing what she has described as a “diversity crisis” in the economics profession and at the Federal Reserve. At the San Francisco Fed, she pushed successfully to balance the hiring of male and female research assistants.

Dr. Daly attacked the diversity crisis at the San Francisco Fed, but ignored the insolvency crises brewing at SVB and First Republic? If diverse teams are smarter and more capable and the San Francisco Fed had more diversity than other regional Federal Reserve Banks, why are two of the biggest failures in the SF Fed’s territory?

“Getting from Diversity to Inclusion in Economics”, Remarks at the Gender and Career Progression Conference (London, England) by Mary C. Daly, Executive Vice President and Director of Research, Federal Reserve Bank of San Francisco

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Did we ever figure out whether corn-based ethanol is good or bad for our beloved planet?

April 17, 2022April 12, 2022 by philg

Kicking off a new Doublethink category for this blog…. “Biden will allow summertime sales of higher-ethanol gas as prices remain elevated.” (NYT):

Gasoline that contains ethanol reduces pollution, as indicated by the “Cleaner Air for Iowa” sticker (not to be confused with an “I did that” Joe Biden sticker, which can lead to being arrested).

The text of the article, however, says that gasoline that contains ethanol increases pollution:

Ethanol is made from corn and other crops and has been mixed into some types of gasoline for years as a way to reduce reliance on oil. But the blend’s higher volatility can contribute to smog in warmer weather. For that reason, environmental groups have traditionally objected to lifting the summertime ban…
Oil refiners are required to blend some ethanol into gasoline under a pair of laws, passed in 2005 and 2007, intended to lower the use of oil and the creation of greenhouse gases by mandating increased levels of ethanol in the nation’s fuel mix every year. However, since passage of the 2007 law, the mandate has been met with criticism that it has contributed to increased fuel prices and has done little to lower greenhouse gas pollution.

Perhaps the contradiction is only an apparent one in that the ethanol blend will reduce pollution in colder weather.

This reminded me to wonder if anyone has ever figured out definitively whether this 17-year-old policy helps or harms Planet Earth. Consider “U.S. corn-based ethanol worse for the climate than gasoline, study finds” (Reuters, February 14, 2022):

Corn-based ethanol, which for years has been mixed in huge quantities into gasoline sold at U.S. pumps, is likely a much bigger contributor to global warming than straight gasoline, according to a study published Monday.
The study, published in the Proceedings of the National Academy of Sciences, contradicts previous research commissioned by the U.S. Department of Agriculture (USDA) showing ethanol and other biofuels to be relatively green.
The research, which was funded in part by the National Wildlife Federation and U.S. Department of Energy, found that ethanol is likely at least 24% more carbon-intensive than gasoline due to emissions resulting from land use changes to grow corn, along with processing and combustion.
Under the U.S. Renewable Fuel Standard (RFS), a law enacted in 2005, the nation’s oil refiners are required to mix some 15 billion gallons of corn-based ethanol into the nation’s gasoline annually. The policy was intended to reduce emissions, support farmers, and cut U.S. dependence on energy imports.
As a result of the mandate, corn cultivation grew 8.7% and expanded into 6.9 million additional acres of land between 2008 and 2016, the study found. That led to widespread changes in land use, including the tilling of cropland that would otherwise have been retired or enrolled in conservation programs and the planting of existing cropland with more corn, the study found.
Tilling fields releases carbon stored in soil, while other farming activities, like applying nitrogen fertilizers, also produce emissions.
A 2019 study from the USDA, which has been broadly cited by the biofuel industry, found that ethanol’s carbon intensity was 39% lower than gasoline, in part because of carbon sequestration associated with planting new cropland.

We have Scientific Certainty (TM) on all subjects related to COVID, e.g., the effectiveness of ordering schoolchildren to wear masks, the ability of vaccines to end the global pandemic (just one more shot for all of us and SARS-CoV-2 will be gone!), and the need to require incoming travelers from zero-COVID China to produce a negative test while the undocumented may stream over the southern border and stay indefinitely with no testing or vaccination prerequisite. The question of whether growing more corn to burn in our pavement-melting SUVs increases or decreases CO2 emissions should be a comparatively simple one and yet Science cannot agree with him/her/zir/theirself.

Readers: What do we think? Do we go with the obvious “corn-based ethanol is bad”? Or are we convinced by the USDA??

Separately, for California readers, a couple of photos from Sunday, April 10 at Florida’s Turnpike Exit 152:

Factory farms may be killing coral reefs, not a warming planet (fertilizer dumped on corn fields eventually finds its way into the ocean)
Book that explores the biggest issue of our age: About 40 percent of the fertilizer applied in the last sixty years wasn’t assimilated by plants; instead, it washed away into rivers or seeped into the air in the form of nitrous oxide. Fertilizer flushed into rivers, lakes, and oceans is still fertilizer: it boosts the growth of algae, weeds, and other aquatic organisms. When these die, they rain to the ocean floor, where they are consumed by microbes. So rapidly do the microbes grow on the increased food supply that their respiration drains the oxygen from the lower depths, killing off most life. Where agricultural runoff flows, dead zones flourish. Nitrogen from Middle Western farms flows down the Mississippi to the Gulf of Mexico every summer, creating an oxygen desert that in 2016 covered almost 7,000 square miles.

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