Tag Archives: responsibilities

No Chief Risk Officer

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That’s what Silicon Valley Bank had for the last 8 months of 2022. Much is being made of SVB’s choosing to employ a Diversity, Equity, Inclusion person in an executive position during that time frame, but a more important function is being missed in this kerfuffle. That is the answer to this question:

It is not clear who handled [SVB CRO until April ’22, Laura] Izurieta’s duties in the last eight months of 2022.

SVB has a President, a Chief Credit Officer, a Chief Operations Officer, and a Chief Auditor. Each of those persons are, or should have been, fully capable of assessing the level of interest rate risk involved with the interest risk of the bank’s holdings with the Fed vs the interest rates it was paying its depositors.

Each of those worthies are, or should have been, fully capable of assessing the demand and cash flow risk associated with the concentration of particular categories of depositors—startups and venture capitalists—with intrinsically very high cash flows and so high rates of cash deposits and withdrawals compared with “ordinary” consumer depositors’ rates of deposits and withdrawals.

Each of those persons are, or should have been, fully capable of assessing the amount of cash held in accounts above the FDIC-insured maximum of $250,000 compared with the amount held in accounts smaller than that limit. Each of those persons are, or should have been, capable of assessing the closely related risk from the degree of concentration of those large accounts in the hands of a relative few account holders and so the risk of any one of those holders withdrawing all of their money.

The presence of a CRO on the payroll and on duty would have been the one to concentrate on those risks, freeing the rest of SVB’s management team to concentrate on other areas, but management, for one reason or another chose not to employ one for those critical eight months. And that management team failed to pay attention, chose not to pick up the slack.

Thousand Year Tradition

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Pope Francis is contemplating ending the celibacy requirement the Catholic Church imposes on its priests and nuns. The hue and cry over ending this “thousand year” tradition is deafening.

I have a brief thought on this. Those decriers are missing, with equally missed irony, the meaning of that thousand year tradition in a two thousand year old church.

For good or ill, celibacy has never been a universal requirement in the universal church. Get the smelling salts; some pseudo-traditionalists seem to need them.

What Are They Teaching?

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Matthew Wielicki, University of Alabama Assistant Professor of Geological Science, is on the right track, but he’s in a vanishing minority.

We’re literally moving away from the foundations of academia. If professors have any hesitancy in their speech, if students are hesitant to ask questions, if there is a decrease in dialogue because of a fear of retribution—that’s the fundamental principles that universities were founded on.

Unfortunately, he says, professors have precisely that hesitancy to speak freely. And this regarding a December 2022 poll by the Foundation for Individual Rights and Expression that found that

[m]ore than half of the nearly 1,500 college faculty members…were afraid of losing their jobs or reputations because of their words being used against them, even if unfairly. About a third said they don’t feel they can freely express their opinions.
“I definitely experienced that,” Wielicki said.

Even more unfortunately, destructively to our nation’s ability to grow following generations of inquisitive children and adults, these self-censoring “professors,” instead of teaching their subject matter, are teaching two critical and pernicious things. They’re teaching, by example—modeling, in the precious lexicon—cowardice. And they’re teaching that morals don’t matter; it’s better to put career, to put personal gain, ahead of morality.

At Least There’s One

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One man in DC understands the situation. Metropolitan Police Chief Robert Contee has this radical idea on getting violent crime, at least, back under control:

What we got to do, if we really want to see homicides go down, is keep bad guys with guns in jail. Because when they’re in jail, they can’t be in communities shooting people.

Sadly, that’s a concept that’s too complex for the wonders of the DC City Council, who passed—and overrode the Mayor’s veto to do so—an ordinance that

reduce[s] maximum penalties for violent crimes such as burglaries, robberies, and carjackings, along with abolishing minimum sentences for most crimes.

Contee illustrated the depth of the problem:

Right now, the average homicide suspect has been arrested eleven times prior to them committing a homicide[.]

Sadly, he’s only one in DC governance, though, for whom the simple solution isn’t too complex to understand.

Germany Welches Again

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I wrote yesterday, in part, about Germany’s disreputable performance in supporting Ukraine in the latter’s war for existence against the Russian barbaric invasion.

Now, Germany has made the apparent decision to walk away altogether in any practical form from Ukraine in that nation’s hour of need, paying only lip service to aiding that nation.

In a landmark speech days after the invasion, [Chancellor Olaf] Scholz promised a Zeitenwende—a turning point—pledging to rebuild Germany’s military, secure alternative energy supplies, and help Ukraine fight off Russia.

Since then, according to Bojan Pancevski, in his Thursday Wall Street Journal article (at the link just above), Germany has

delivered on the latter two pledges, but a year on, Germany’s armed forces are in an even worse condition than when the war started, according to military commanders….

Pancevski is being generous, though. See yesterday’s table (at the first link); Germany’s—which is to say Scholz and his fellows in his government—have been niggardly in their…efforts…with five nations other than Poland, the US, and Great Britain contributing at least 50% more to Ukraine’s war effort on a GDP-normalized basis. Germany is doing next to nothing to help Ukraine. Only Italy and France are more miserly, throwing mere euro pennies, insultingly, at the feet of the Ukrainians.

More of Pancevski’s generosity:

On Ukraine, Mr Scholz discarded the longstanding pacifism underpinning German foreign policy to become the third-largest supplier of weapons to Kyiv after the US and the UK, according to the Kiel Institute for World the Economy. Two days after the invasion Mr Scholz lifted a ban on exporting weapons to war zones.

As yesterday’s table demonstrates, that “third-largest” sum is only in absolute terms. When the totals are normalized to each nation’s GDP—i.e., when the sums are matched to what the nations can afford to commit–Germany’s “generosity” fades to a distant 10th. And the nation further demonstrates its version of generosity by slow-walking on, and excuse-making for, its decision to delay delivery of the Leopard tanks it recently promised Ukraine.

German betrayal extends further.

By disdaining to rebuild Germany’s military establishment, Scholz has only perpetuated (not merely extended) his predecessor Angela Merkel’s perfidy in welching on the German promise to commit 2% of its GDP to military support for NATO.

Here is an outcome of that:

The country has 180,000 active soldiers and just over 300 tanks, half of them not roadworthy, down from 500,000 troops and 5,000 tanks at the height of the Cold War.

Germany had said earlier that it would create a €100 billion ($106 billion) fund with which it would rebuild and rearm its defense establishment. That, though, would need an amendment to its Basic Law, and no one in the German government has made a move toward generating that amendment so it could be put up for debate and passage.

Germany is not only betraying its fellow NATO members with those reneges, that nation is betraying its own citizens in those eastern States that were under Russian Soviet occupation via the fictitious (if narrowly, strictly legal) German Democratic Republic.