Wokeness has replaced competence and merit across the banking sector, and San Francisco Fed Chief Mary Daly is the poster child of this pernicious trend.
A protege of Treasury Secretary Janet Yellen and short-list candidate for Federal Reserve vice chair, Daly was supposed to be supervising Silicon Valley Bank but apparently was too busy playing politics and pushing woke agendas to regulate rogue banks like SVB, the second-biggest bank failure on record.
Daly had other priorities, including climate change, George Floyd and Black Lives Matter, inequities between blacks and whites, LGBTQ+ rights and a host of other woke social-justice issues that had nothing to do with banking and finance.
Daly’s Fed bio gushes she’s committed to “understanding the economic and financial risks of climate change and inequities.” Never mind the more existential threat of banks in her jurisdiction amassing mortgage bonds with longer maturities that exposed investors to greater interest-rate risk.
In a recent LinkedIn post, Daly appeared sidetracked by racial justice, writing: “What Black voices have I lifted up? Equity & inclusion begins with me. #GeorgeFloyd.” She also posted selfies with local Black Lives Matter activists.
Meanwhile, Daly missed all the warning signs of runaway inflation, which led to the steep interest-rate hikes that made SVB’s investments worthless.
In 2021, she said, “I am not thinking that we have unwanted inflation around the corner. I don’t think that’s a risk.”
Early last year, moreover, Daly denied the economy was suffering from painful inflation: “That’s not what I see.” She also didn’t see the need for hiking interest rates.
Then in August, she said inflation didn’t affect her personally, so what’s the big deal? “I don’t feel the pain of inflation anymore,” Daly told Reuters.
“I’m not immune to gas prices rising, food prices rising,” she added. “But I don’t find myself in a space where I have to make trade-offs, because I have enough, and many, many Americans have enough.”
Easy for her to say: She pulls down more than $422,000 a year.
From her policy papers, speeches and interviews, it’s clear that Daly thinks the Fed’s core mission isn’t controlling inflation but achieving full employment — and raising interest rates just hurts that goal. Her agenda is more jobs and higher wages for minorities, so sound money is not a priority for her — even though inflation is a huge tax on the working class and especially minorities.
Until recently, Daly was opposed to the Fed’s hawkish shift to tightening credit to fight inflation. Her bank examiners no doubt shared her dovish mindset and didn’t anticipate rates increasing, which may also explain why alarms weren’t raised at SVB.
Daly has no background in banking or managing risk. After dropping out of high school, she worked in a donut shop before eventually getting her GED and entering college, where she became enamored with a socialist professor.
She said she was inspired by Marxian economist Gene Wagner, who “has mentored me my whole life.”
Several years later, after earning a PhD from Syracuse University, Daly landed a job as a labor inequality researcher at the San Francisco Fed, where she ingratiated herself with then-SF Fed President Janet Yellen, who helped her fail upward.
Daly called Yellen an “important mentor in my life . . . [S]he made my career kind of explode.” Daly quickly rose up the ranks, and in 2018, she was named president and CEO of the SF Fed — but more important to the wokesters, she was the “first openly gay” regional Fed bank chief.
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Another Daly cheerleader was Greg Becker, the chief executive who presided over collapsed SVB. Until his Friday ouster, he conveniently also sat on SF Fed’s board. It was one big happy woke family.
SVB’s board is packed with Trump-hating Hillary, Biden and Obama donors obsessed with “equity and diversity.” One director, Elizabeth “Busy” Burr, argued for hiring underrepresented “people of color” in banking to counter “four years of a president who unleashed a tide of racism and white supremacy.”
“It’s not enough to just report the numbers,” she said. “Instead, we need to demand a deep look at company culture.”
While they were busy looking at company culture, the equally woke SF Fed failed to notice SVB making risky bets on long-term mortgage bonds, even as Federal Reserve Chair Jerome Powell was telegraphing his intent to jack up interest rates in 75-basis-point increments.
Is Daly being blamed for not seeing the warning signs? Of course not. Daly has made President Biden’s short list to fill the open vice chair seat on the Federal Reserve Board.
Biden, as usual, blames his predecessor Donald Trump for the collapse of SVB. But he should look no further than Daly, the social activist posing as a bank regulator. Who’s regulating the regulators?
Paul Sperry is former Washington bureau chief for Investor’s Business Daily and author of “The Great American Bank Robbery.”