Earlier this month, Steven Rattner, Michael Bloomberg’s personal money manager, was invited onto BloombergTV’s afternoon program, Bloomberg Markets: The Close. In an interview with former ABC News president-turned broadcast journalist, David Westin, Rattner was asked to opine on financial markets’ political and economic landscape in the aftermath of the collapse of Silicon Valley Bank (SVB).
When asked about the distinction the Biden administration was trying to make between saving SVB depositors, as opposed to shareholders and investors, Rattner replied. “Look, the politics of this are toxic, Elizabeth Warren already has an op-ed piece out on the Times website talking about how this is a failure of regulation from this 2155 bill that was passed a couple of years ago.” The “2155 bill” that Rattner was referring to is S.2115: The Economic Growth, Regulatory Relief, and Consumer Protection Act (also known as the “Crapo Bill” or, amongst progressives, the “Bank Lobbyist Act”), that was signed into law by former President Donald Trump in 2018.
Later, when asked about concerns over banking consolidation following SVB’s collapse, Ratter stated, “[Money fleeing to larger banks is] not a good outcome from this. We don’t want to be a country of four banks…And so we have to do something to make sure people still have confidence in these regional banks because we want a broad banking system. And that is exactly what this 2155 bill tried to do, was give them more regulatory freedom so they could compete more effectively.”
Given Rattner’s career as an investment banker that facilitated high profile media industry mergers and acquisitions, as well as his current role as the wealth manager for billionaire Michael Bloomberg’s family fortune, his sudden concern for consolidation is quite amusing. However, the rhetorical sleight of hand he deployed to describe S.2155 is much more serious. Rather than describing the outcomes of the bill, as Warren did, Ratter instead drew attention to its intentions. By doing so, Rattner is able to position left-leaning critiques of deregulation as “political” (read: bad), in contrast with his own “objective” (read: good, but more specifically pro-industry) opinion.
Rattner’s argument isn’t quite wrong; Warren’s criticism is political – she is, in fact, a politician. But so is his own. Politics is just the word we have for debating how to use power in our society. The positioning of himself as “above-the-fray” is the point. Politics is messy and economic policy is always couched in politics. People like Rattner have agendas and letting him to present himself as a mere stater of facts while spewing misleading assertions allows him to hide those priors in a cloak of ethos. Rattner had to return millions of dollars to the New York State pension fund to settle his legal exposure; he’s clearly not in it for public service. Why then, are we told to care about his opinions on policy that should seek to serve the public?
It’s not at all surprising that Rattner’s analysis of SVB would center around corporate mismanagement rather than legislative deregulation, however it is surprising just how many facts the purported “fact stater” left out.
S.2155 was definitionally a deregulatory bill – it’s literally in the name. Under the guise of providing community banks with “regulatory relief” from some of the Dodd-Frank reforms passed in the wake of the 2008 financial crisis, additional provisions in the bill also netted huge benefits for much larger financial institutions. Section 101 removed constraints on the ability for community banks to issue high-risk loans and Section 104 exempted the vast majority of banks from reporting data necessary for regulators to protect against discriminatory lending practices. Most notably, Section 401 quintupled – from $50 billion in assets to $250 billion in assets – the threshold for enhanced regulatory scrutiny. (David Dayen’s 2018 piece in The Intercept is a fantastic deep dive into the lobbying efforts behind various parts of the bill). This provision was one in which SVB’s now former CEO Greg Becker specifically, and successfully, lobbied for. As a result, SVB was able to continue its risky behavior, and even grow to become the sixteenth largest bank in the US, without adhering to the additional stress tests and capitalization and liquidity requirements that could have protected against its collapse had they been enforceable.
Look, it isn’t too much of a stretch to say that waiting for Rattner – someone who amassed enough wealth to buy himself out of fraud charges by being “the ultimate consigliere to power” – to suddenly come around on the benefits of increased banking regulation is a little like waiting for pigs to fly. I’m not saying that he has to agree that S.2155 was to blame for SVB’s failure. However, the fact that he was given a platform under the presumption of “expertise” on the topic, only to completely omit critical information is troubling. Rattner’s appearance on Bloomberg Markets: The Close marked the debut of Westin’s Wall Street Week show expanding beyond its usual Friday slot into daily segments across other BloombergTV programs. If the purpose of Wall Street Week is to “address what is important to the long term, sophisticated, investor”, then offering “experts” like Rattner airtime to discuss topics they clearly don’t understand simultaneously robs Westin’s viewership of the necessary context to make sense of breaking news – betraying Westin’s own stated goals – and does a disservice to the notion of media expertise more broadly.
The Perfect Fathers’ Day Gift ($11.7 Million In Untaxed Cash)
The academic job market may be difficult for newly minted PhDs looking for tenure-track jobs, but long-established academics seem to have no shortage of opportunities to enrich themselves by selling off their credibility from being associated with some of America’s most respected institutions of learning. The latest professor to become publicly outed as a member of the distinguished academic-to-shady-business-consulting pipeline is none other than Joseph Bankman, a longtime Stanford Law School Professor and the father of alleged crypto-criminal Sam Bankman-Fried.
It was revealed this week that Bankman received a “gift” from an FTX subsidiary totaling $11.7 million for his “philanthropic advice” to FTX. The $11.7 million in tax-free cash just so happens to be the maximum tax-free gift an individual can make in their lifetime, something that a tax law specialist like Mr. Bankman would be well aware of. This hefty sum appears to be in addition to the $16 million vacation home in the Bahamas that was purchased by FTX under the name of Joseph Bankman and his wife, Barbara Fried, a Professor Emeritus at Stanford Law School.
Though Bankman’s Stanford salary is not publicly available, there is no doubt that the multi-million dollar figure far outpaces his Stanford salary (for comparison, another Stanford Law Professor, Principal Deputy Assistant Attorney General Pamela Karlan disclosed she earned approximately $600,000 a year through her teaching position; Stanford salaries may vary, but Bankman’s academic pay is certainly in the hundreds of thousands, not the millions or tens of millions). The massive payday he received from his son’s crypto company admits Bankman into the club of professors who’ve made more money marketing their position as a respectable academic than from their ostensible job – teaching and academic research. These intellectuals- for-sale have successfully built a pipeline program from a pedigreed university professorship to a marketable veneer of respectability.
Stanford isn’t alone in this problem – schools across the country are plagued by it, but administrators have seen fit only to turn a blind eye and ignore it. It’s time they crack down on their faculty capitalizing on the respected name of their university to help legitimize sketchy companies. Unfortunately, it seems as though Joseph Bankman’s fall from grace will be treated as an unfortunate result of his son’s criminal actions rather than part of the academy’s larger issue with unchecked corporate influence.