Wednesday, a bloated Chris Hayes hosted Silicon Valley representative Ro Khanna to discuss the bailout of Silicon Valley Bank (SVB) and make fun of Republicans. Khanna is getting some bad press in progressive circles for his slavish obedience to whatever the moneyed interests in Silicon Valley demand, and he’s getting close to being declared anathema because he is associating with billionaire and Elon Musk confidant David Sacks who was a major funder of J. D. Vance’s successful Senate campaign in Ohio.
Alongside the tech elite advocating for the federal government to backstop SVB was the congressman from Silicon Valley, Rep. Ro Khanna (D-CA). Khanna made the media rounds last weekend. On CBS’s Face the Nation, he urged the Treasury Department to provide more clarity on what exactly the department was doing. He waxed poetic about how the payroll for companies was tied up through SVB, even claiming that some of the firms in question were trying to cure cancer. “The principle needs to be that all depositors will be protected … I have no sympathy for the executives, no sympathy for the people who have stock there,” Khanna said.
On MSNBC host Chris Hayes’s show, Khanna carried the same message. He recalled how he voted against the 2018 bank deregulation bill that critics say precipitated this incident. By Tuesday, he had co-sponsored legislation introduced by Rep. Katie Porter (D-CA) and Sen. Elizabeth Warren (D-MA) to repeal key elements of the 2018 deregulation bill.
Khanna also pushed for the bailout in private. According to The New York Times, Khanna cornered top Biden aide Steve Ricchetti at an annual dinner of the Gridiron Club, a Washington tradition, and told him that the bank crisis threatened Biden’s record of achievements. “This is a massive issue not just for Silicon Valley, but for regional banks around America,” Khanna recalled telling Ricchetti.
But also on Tuesday, Teddy Schleifer’s Puck News tweeted about how Sacks and his wife were hosting a fundraiser for Khanna, scheduled for the end of the month. The price of admission ranged from $3,300 to $13,200.
Khanna thought this appearance was important enough that he tweeted out a clip highlighting this one statement:
When Silicon Valley had this crisis, the government responded within three days to protect the depositors. Why don’t small communities like East Palestine, OH and Jackson, MS have the same kind of government action?
There is a lot of material in the clip that could use a critique — the full transcript of this clip is at the end of the article — but I want to hit the comparison of the train wreck in East Palestine with the water crisis in Jackson, Mississippi because that is a comparison leftist social media accounts are making. What they are doing is trying blunt the argument that SVB was bailed out because of the leftist politics of its depositors while working a Marxist class warfare angle.
Let’s look at the cases and see if that analogy holds true.
The proximate cause of the water crisis in Jackon, MS, was the Pearl River flooding in August 2022. Governor Tate Reeves immediately declared a state of emergency and asked for federal aid. Three days later, Joe Biden declared a state of emergency and directed FEMA to get involved.
Jackson’s water system has been problematic for over 20 years. The EPA has been involved in helping Jackson upgrade its water and sewer system since 2012. In the 2020-2021 budget, the city allocated $61,000,000 for water and sewer operations. In December 2021, the EPA awarded Jackson a $74.9 million grant for water infrastructure improvement.
The mayor claims the city needs at least $2 billion to make things right. The usual claims of racism (the city is majority Black) and “environmental justice” are flung about. But the facts are, 1) the city has lost over 50,000 residents since 1980, b) the city’s bond rating has attained junk status, c) large commercial customers have found more reliable utilities costing Jackson revenue, and d) the city’s water department has shown no interest in doing the basics of keeping the system running. (This article is an excellent overview of the situation.) In my view, you’re dealing with a failed state.
I would argue that far from racism being the problem, there is a greater chance that fear of being called racist is the culprit. If this level of mismanagement had persisted anywhere other than a majority Black, solid Democrat city in a Republican-run state, federal and state law enforcement would be crawling all over the place. People would’ve been taken away in handcuffs.
The point is not that it doesn’t suck to live in Jackson because, obviously, it does. It sucks to live anywhere where you can’t drink the water. But it sucks to live there because the local government has not been able to come to grips with the problem despite federal assistance going back two decades.
On February 3, a freight train carrying hazardous chemicals derailed in East Palestine, OH. The freight train was properly operated, the hazardous chemical tankers correctly marked, and no, the Trump administration did not stop any rule that would have prevented the disaster (Debunking the Claim That Donald Trump Is to Blame for the Ohio Train Disaster). Three days later, citizens were ordered to evacuate (‘Leave Now’: Hundreds of Residents Near Site of East Palestine, Ohio Train Derailment Ordered to Evacuate). Thirteen days after the wreck, after emergency crews had burned off the toxic chemicals creating a downwind plume over 200 miles long, Ohio Governor Mike DeWine asked for federal disaster assistance. The Biden White House refused but reversed course on February 18, fifteen days after the incident. Eighteen days after the derailment, Republican Governor Mike DeWine visited East Palestine. Twenty days after the train wreck, the human train wreck that is Bidens’ Transportation Secretary finally paid a visit (Buttigieg Finally Makes It to East Palestine, but It Does Not Go Well).
Read my summary of the wreck and response at Biden EPA Administrator’s Advice to Chemical Poisoning Victims in East Palestine, OH, Sounds Like Cruel Parody.
Compare and Contrast
The comparison between East Palestine and SVB is possible if you assume that Norfolk Southern was chocked to the gills with Diversity, Inclusion, and Equity grifters and didn’t have a risk management officer. SVB was the proximate cause of its own demise and East Palestine collateral damage. Yet, all the power elites in both parties sprang into action to ensure a soft landing for SVB’s depositors (or residents in this comparison), while it took two weeks for the East Palestine derailment to rate a request for help…a request that was denied. The SVB depositors are made whole. The residents of East Palestine are living in a toxic wasteland where the water may not be safe to drink for decades (We Are Experiencing a Modern Day Camp Lejeune in East Palestine, Ohio). Willing participants vs. innocent bystanders. Insured beyond the requirements of the law vs. left out to dry. Friends in high places vs. no one cares.
Similarly, the comparison between East Palestine and Jackson fails. The residents of Jackson are suffering, but it isn’t because of some force majeure. The hardship imposed on those unfortunate people is not because of the lack of government action that Khanna complains about. Jackson has received federal and state aid and technical assistance to solve their water and sewer problems for over 20 years. For reasons no one has adequately explained, none of that aid has done very much good.
East Palestine’s problem is unique. It has a demographic profile that looks nothing like the depositors at SVB or Jackson, Mississippi.
East Palestine is located in Columbiana County, OH. The voters in that county preferred President Trump to Joey SoftServ by 45 points in the 2020 [s]election. According to the Census Bureau, the median age is 40. Nearly half the households have someone over 60 living there. Fifteen percent of the 1208 families are people over 65, living alone. There are 33 Blacks in the town of 4,548. Only 9% of the town has a college degree. The median income is $26,000, compared to Ohio’s average of nearly $62,000.
Those data points explain 100% of the actions taken so far. To the Biden White House, these people are MAGA extremists who should just die anyway. To the bureaucrats everywhere, they are a down-at-the-heels, blue-collar, and overwhelmingly White town that just doesn’t matter and isn’t worth the effort of helping.
No, the government is not there to help. No, they don’t care about you. And no, you can’t trust them.
Unfortunately, the outcome for Jackson and East Palestine may be the same. Anyone who can leave will. Those who can’t will be forced to stay and deal with the aftermath.
HAYES: One of the things that I think is important, and we see that with Sherrod Brown and J. D. Vance in the wake of East Palestine, which is to say, okay, you guys want to talk about all this cultural stuff, and you want to make your villain, let’s call the question about what’s the material. So Vance and Brown have introduced legislation that would amp up safety rules and regulations for railroads. It seems important to call the question here on bank regulation. Like you want to talk about all this stuff, make all these people, James Comer, and all your colleagues vote one way or the other about regulating these small- and mid-sized banks.
KHANNA: Absolutely; let’s go back to making sure they have liquidity tests. Let’s go back to making sure they are paying the premiums to cover the FDIC. Here’s what I don’t understand; here’s the actual argument the Republicans could’ve made, which may be fair, that when Silicon Valley had this crisis on a bank, the government responded within three days to protect the depositors. I supported what the government did. Why don’t we see that in Jackson, Mississippi? Why don’t we see that in East Palestine? Why don’t small communities have the same kind of government action? And then we can have a debate about that. But instead, this nonsense, and it’s not convincing anyone.
HAYES: It’s also wild because it only…I was looking through to research for that, so partly bias on my part because I’m looking for it…the degree to which this became a line immediately. It only took twelve hours, and they are all singing from the same hymnal this ludicrous, preposterous story that this incredibly wealthy and wealthy-connected Silicon Valley Bank is some bastion of leftism, but they are all saying it.
KHANNA: They have this preconception of what California is like, what Silicon Valley…
KHANNA: And it just feeds into that. And they aren’t looking, actually…For all of their concern about China and staying ahead of China, this is where a lot of the AI is being developed. Defense tech is being developed. It’s an unserious Republican Party. I mean, that’s what’s sad. You want a party on the other side that should question you. To be an intellectual rival.
HAYES: It’s interesting, McHenry, who, Patrick McHenry, who’s sort of in leadership there, had a call over the weekend with, you know, with Republicans, and they were trying to get people away from this nonsense and try to, like, make a plausible case, but I’m not sure how successful that’s going to be.