RadixJournal - March 15, 2023


Was It Even A Bank？


Episode Stats

Length

14 minutes

Words per Minute

197.97813

Word Count

2,807

Sentence Count

132

Hate Speech Sentences

3


Summary

Silicon Valley Bank is one of the most well-known venture capital funds in the world. But is it actually a bank? And what are the connections between the company and the Chinese venture capital industry? And why is it so important to the US government to know what s going on at the bank?


Transcript

00:00:00.000 This is Charles. Sorry, I'd like to call. Yeah, I think we need to really ask the question of
00:00:05.980 whether or not Silicon Valley Bank is in fact a bank or really has much at all to do with
00:00:10.420 Silicon Valley altogether. Obviously, there's a lot of connections of the bank with the Israelis
00:00:15.720 and the Chinese. John Peters, the former auditor there, the chief auditor there, worked for an
00:00:20.520 Israeli company beforehand. Lots of the money that's come in over the years has come in from
00:00:25.400 Chinese-connected venture funds. So there's a national security, international relations,
00:00:31.060 sort of a geopolitics connection here as well. I've written about some of that stuff on my
00:00:36.900 substack and elsewhere and sort of talking about it, but it's very much a thing. And I think while
00:00:42.840 it's true that there were some basically issues with a lot of the VCs not wanting to mark down
00:00:47.700 their investments, the other side of it too is to understand that a lot of these loans,
00:00:53.000 particularly the personal loans in real estate, commercial real estate, that sort of thing,
00:00:58.820 a lot of these loans were given at very preferable terms. And that kind of led to an explosion in
00:01:05.040 prices in the Bay Area. And there's the other sort of angle here of the wineries, lots of money going
00:01:12.720 into the wineries, loans for wineries, which a lot of banks don't touch with a 10-foot pole.
00:01:17.280 And wineries, of course, can be used for all kinds of things, laundering money, having illegal aliens
00:01:24.360 work there, and the like. And then there's also the sort of compromised issue here, which is,
00:01:30.240 you know, the governor of the state of California has a lot of money with Silicon Valley Bank,
00:01:36.420 you know, Gavin Newsom in this particular case. So there's a lot of very interesting detail here.
00:01:41.720 You know, my friend Ken Clippenstein did some work there. There's some other stuff I've been
00:01:47.140 working on here. I was called by the Justice Department today, because some of the things
00:01:51.900 I've written about, Secretary White to the call, about this whole situation. And we're going to
00:01:58.700 discover that, in fact, like a lot of the money that was in this, these banks were actually,
00:02:04.180 it was money that was either stolen in some cases from overseas, and then sort of put into venture
00:02:08.740 funds as a means of laundering it. Because, you know, to really do a proper laundering,
00:02:13.220 right, to do a real proper money laundering, you need a willing bank. And this is like why a lot
00:02:19.180 of the major banks have a lot of rules, right? They have these suspicious activity reports,
00:02:24.640 or SARs. And you can sometimes be doing something totally innocuous and still be hit with an SAR,
00:02:31.420 particularly if you're a business that deals a lot in cash. And so what happens is that a lot of
00:02:37.420 people are forced into these smaller regional banks. But a lot of the regional banks, in order
00:02:41.380 for them to be able to make money, they want to be regulated as smaller banks. But what ends up
00:02:46.320 happening is they end up getting large amounts of deposits, right, particularly during the 2020 period,
00:02:51.220 where the US debt, you know, went way up, China gets all of our dollars, they then, you know,
00:02:56.800 take those dollars, and they do things like commercial real estate, you know, with Jared Kushner,
00:03:00.980 or venture capital, right? That's sort of how the sort of money flow works. And to me,
00:03:06.000 what's interesting about this, so, you know, we have this company Circle, $3 billion, you know,
00:03:11.220 sitting in an account, basically, in Silicon Valley Bank, and nobody can tell me what the
00:03:16.980 health circle actually does, like as a business, right? So there's like a lot of things like this,
00:03:22.640 where you just sort of go through this with a fine tooth comb, and you're like, hmm, what's up with
00:03:27.080 this bank? What's up with that bank? And in the geopolitics angle, you know, America and China are
00:03:32.400 breaking up. And Israel is sort of, you know, going into freefall, like, it's not a coincidence
00:03:37.840 that Signature Bank also got got hurt, right? Signature Bank being a sort of Israel, very Israeli
00:03:43.980 bank, where Ivanka Trump was on the board, where Bernie Frank was on the board. By the way, it's a
00:03:49.380 very common technique for some of these smaller banks to, to use social proof by having former
00:03:55.020 members of Congress, or by having, you know, basically celebrities lend their sort of cachet
00:04:00.160 to it. I tend to avoid those. Elizabeth Holmes was the master. Elizabeth Holmes was the grandmaster
00:04:08.400 of this technique. Yes, well, I mean, she was on the board. Yeah, I mean, she was, she was a good
00:04:14.920 example of this. And, you know, so that's sort of the backdrop there. That's like, just so people kind
00:04:21.800 of understand what's going on here. You know, I went through this sort of history of Silicon Valley
00:04:26.500 Bank, you know, they were backing weird, you know, weird secret societies from Andorra, of all places,
00:04:33.380 which is a sort of global hub of money laundering in Europe. As a lot of these smaller principalities
00:04:39.440 or nation states are, oftentimes, they sort of look the other way on a lot of questionable things
00:04:43.880 that take place as a way of making fees and propping up their economy. And so that's sort of one cut
00:04:49.180 on it. And then the other sort of, you know, cut on it was, you know, they'd had issues in the 1990s,
00:04:54.960 they were under federal supervision in the 1990s, precisely because they lent way too much out for
00:04:59.560 housing issues, and for real estate loans. I agree with, you know, the previous speaker who was
00:05:05.980 pointing out the issues of, you know, as the Fed raised interest rates, these assets, you know, ended up
00:05:12.440 being worth a lot less. But I think, I think we're sort of waiting for a lot of the loans to go belly
00:05:20.220 up too, because obviously, you know, when you borrow money from a bank, you usually don't have
00:05:25.440 the money, right? And it's not like the material condition for a lot of these Silicon Valley types
00:05:30.140 got richer, you know, in the last bit here. I think the other aspects here that people should consider
00:05:36.000 is, you know, I've written about Jason, Jason Calacanis, David Sachs, and how they are, you
00:05:42.280 know, fronts for the mob. Now, that's like, that's not my opinion, right? Like, I know Tom, Tom has just
00:05:47.980 shared an article of mine, I'm about to drive. So forgive me if I'm a little whatever, helter
00:05:52.340 skelter today, because it's sort of been a lot of news going on. But basically, what happened in my,
00:05:58.740 you know, so what happened with Jason, you know, Jason Calacanis and David Sachs,
00:06:02.940 Jason Calacanis, his father ran a mob bar for many years. By his own admission, his father was
00:06:09.160 raided several times by the feds. He, if you go and look in his Wikipedia page, you can't get a
00:06:14.420 precise date for when he married his Chinese wife, which is very strange. He's a manic depressive,
00:06:19.660 self-admitted, you know, talks about it often. Oftentimes, you'll see in the cases of money
00:06:24.660 laundering, they use people who are sexual eccentrics, or people who are sort of strange people who you
00:06:30.960 just can't understand them, man, because they're geniuses, right? And so that's sort of a common
00:06:36.340 technique, you know, that they use, remind you of anyone, say Elon Musk, right? So and then the
00:06:41.340 other sort of one is on David Sachs. Now, I have been on pretty good authority from the Stanford world
00:06:46.480 that Sachs was a kind of closet case, you know, couldn't get basically couldn't get fucked while
00:06:51.120 he was at Stanford, hated women, sort of let a lot of his hatred of women come out on the pages of
00:06:55.980 the Stanford Review. He, of course, writes the book, The Diversity Myth with Teal. I've met both
00:07:01.800 Teal and Sachs. The passages that people like to quote that are like particularly noxious and wicked
00:07:07.360 that are, you know, that are sort of anti women, and sort of like, frankly, racist. I've never heard
00:07:12.800 those sentiments from Teal ever. Now, I have my criticisms of Teal. I think Teal was tipped off by
00:07:18.700 Likud intelligence, given that the Likud, you know, people in Israel were sort of taking their money
00:07:24.280 out of, out of Silicon Valley Bank, right? So that was a very common thing that we saw.
00:07:30.820 And of course, you know, the Founders Fund has all kinds of Likud friendly people around it. Keith
00:07:35.560 Raboi worked for many years for, for, you know, a number of sort of Israeli Likud interests. I've
00:07:42.560 written about that too, if people want to search it, Raboi, R-A-B-O-I-S. So, you know, in fact,
00:07:49.300 by the way, marries this young woman. So he's a Stanford graduate, a Jew. He marries this Italian
00:07:53.840 woman, much younger than him. I'm no, you know, I'm no prude, whatever people do what they got to
00:07:58.560 do. But she went to Chapman University, and her father was heavily implicated in a number of mob
00:08:03.700 businesses over the, over the years. So that's sort of, he marries into the mob, you know, that's
00:08:09.100 sort of the backdrop there. So yeah, anyway, that's sort of the, that's sort of the players in the game.
00:08:14.520 I think we oftentimes get lost in the kind of economic minutia of like, what's going on.
00:08:20.700 Obviously, if you're a money launderer, you want the money to continue so that you can take your
00:08:24.420 fees, which you find a lot of times that with money launderers is that they tend to not have
00:08:28.560 that much money, because usually they're pressured into money laundering, either through personal
00:08:32.640 compromise or through, you know, through family ties or intelligence ties. That's a very common one
00:08:39.020 that you'll see. So yeah, I think we need to be sort of mindful of this question. Now, if Silicon Valley
00:08:44.160 Bank is not a bank, and it's not a Silicon Valley property. So that raises all sorts of other questions,
00:08:50.320 because if it's a mob front, then perhaps maybe it shouldn't be bailed out by the other banks, right?
00:08:56.040 Now, maybe in the case of this bailout of the other banks, what Biden is doing is he's putting them all
00:09:01.060 on notice, that they themselves are going to be harmed if there's other bank runs. Because historically,
00:09:06.140 what tends to happen in some of these runs is that the banks basically are like, oh, can't do anything,
00:09:11.820 can't fix the problem, right? And so they try to dump it onto the public, you know, writ large. And that's
00:09:16.740 indeed what we saw in the Great Depression. It was a sort of way of attacking the policies of FDR,
00:09:22.960 certainly of Hoover to some extent, but really to FDR, because that's really when it got going.
00:09:28.480 And, and so that's sort of the backdrop there. Most of the sort of like crazy stuff and bank runs and
00:09:32.880 everything in the 1930s happened basically right in between the period of the 32 election, and the sort of
00:09:41.100 swearing in of FDR, which people tend to forget this sort of history here. Obviously, you had a lot
00:09:46.720 of foreign connections of Henry Ford, too. You know, Adolf Hitler said that he would have supported
00:09:53.120 him for president in 1924, which is a rather crazy thing that people often forget. And, you know,
00:09:58.880 a car company guy who has all these weird foreign connections, I don't know, sounds like somebody else
00:10:04.060 in the public discourse today. And of course, his, his lieutenant is David Sachs and Jason Calacanis,
00:10:09.260 who have long standing relationships there. And one final point, I should mention that Jason Calacanis is a
00:10:15.380 scout for Sequoia, Sequoia being a venture fund that's heavily backed by the Chinese. And its head is a guy
00:10:22.120 named Roloff Botha. Roloff Botha is of the Botha family, a very famous family in South Africa. And he's married
00:10:28.180 to the daughter of a Chinese intelligence officer. So anyway, that's sort of those are the players in the game.
00:10:35.240 And, you know, it's a very interesting dynamic. I'll certainly be writing a lot of more about this
00:10:41.600 and talking more about it, to the extent I can. I think the interesting question is what happens
00:10:47.540 with Teal now? Because obviously, a number of these tech investments are dog shit and fake.
00:10:52.940 If you're trying to move money, by the way, like, let's say you're trying to move money into the US
00:10:56.500 from China, a lot of the Chinese saw what was going on in China vis-a-vis Jack Ma.
00:11:01.320 And they're like, fuck this, we need to get out of here. So there was a lot of money,
00:11:06.360 particularly Hong Kong money, particularly South China money that was moved into the US.
00:11:11.340 And my view of what should happen in these cases is that every depositor should be audited to see
00:11:17.820 if they're actual companies or actual foreign fronts going through one by one by one. That would
00:11:23.720 be sort of what I would do were I doing it. I would be like, hey, what's the hurry? Oh,
00:11:28.020 your business can't survive that long? Well, I guess I mean, I would just play I would play it
00:11:33.340 much slower than has been done. Well, the Biden administration has an opportunity to invest
00:11:39.680 each and every one of these companies now. You know, they the books are open, they're in charge.
00:11:46.060 I mean, this will Yeah, what I would do personally is I would freeze a lot of this money. China has
00:11:50.860 frozen a lot of money belonging to the United States investors in China. Turnabout is fair play.
00:11:56.340 Okay. Let's go about it that way. That would be how I would answer it.
00:11:59.660 Mm hmm. Hey, Richard, can I chime in here? Sure. Hey, good evening, everyone. Well,
00:12:05.100 good evening here. Yeah, in terms of SVP, it's sort of interesting, though, how everyone's a
00:12:09.660 libertarian until the Federal Reserve raises rates. But David, I mean, the David Sachs thing has been
00:12:16.760 hilarious, basically. Yeah, I mean, I'll just tell you, I'll just tell you, I've always been in favor of
00:12:21.580 raising rates as somebody, you know, because because because if you raise rates, you essentially
00:12:25.740 move in an anti mob direction. Right. And so my view is that most of the problems we have in the
00:12:30.780 country come from, come from basically not taking on the mob. You know, we can spend as much money as
00:12:36.180 we want on infrastructure. But if the mobsters steal all the money, what's the point? Right? We
00:12:40.260 might as well just stay home. So yeah, that's just a zero rate policy, just as long as you regulate the
00:12:47.700 liability and asset side of the banking industry, you could get rid of a lot of these problems. As long as
00:12:53.200 you had like a regulatory structure in place, you could leave rates at zero. I mean, I don't think I
00:12:57.820 don't think that would ever work just in practice, like as somebody who's dealt with banking regulators
00:13:01.840 in the past, like, they get compromised, like, very fast, like you would be, I mean, I've seen this in the
00:13:07.840 state of Texas where they, you know, they figure out they're on the same charity boards. There's
00:13:11.860 all sorts of like fringe benefits, golf, golf memberships, the like. Yeah, there's the moral
00:13:17.600 hazard of that. And I've seen that I've seen that personally in banks that I've like been involved
00:13:21.300 with. I should, I should mention, I personally bank. So I have 90s, 91 investments. Now, I personally
00:13:27.020 bank at eight different banks, regional banks of different forms and variety. And, you know, this is this
00:13:35.220 was a systemic risk that people knew about some things that people talked about. I'd had dealings
00:13:39.920 with Silicon Valley bank people in the past. They didn't vibe as bankers, they vibed as like,
00:13:45.500 kind of weird, like, we're, you know, it's like, we're the cool banker, man, you know, kind of
00:13:49.620 attitude. And they were offering all kinds of like weird terms to me that were like very friendly in
00:13:55.420 different ways. But then what would happen is the fees would go drastically up in year three or four.
00:13:59.280 And that was sort of a way of locking you into to the relationship. And I was like, whoa, whoa, whoa,
00:14:04.760 I just got out of a terrible marriage. I don't know that I want to get, you know, I don't want to
00:14:08.400 get in here. Anyway, go ahead. I didn't mean to interrupt you.