by Joseph P. Farrell, Giza Death Star:
Recently I did a News and Views about the derivatives sloshing around in the financial system, and about Ellen Brown’s thesis that – at it’s deepest darkest inner-most heart – the SillyCON Valley Bank failure was about derivatives. I have to call it “SillyCON” in view of all the stories and theories circulating out there about the bank. One of them concerns the story of its “risk management” or “risk assessement” officer which was found on the bank’s own website, and it truly has to be read to be believed:
TRUTH LIVES on at https://sgtreport.tv/
SVB Hires Kim Olson as Chief Risk Officer
Let’s focus on something from this announcement for a brief moment. At the very end of this article we read that the new risk assessment officer for the bank – Kim Olson – has the following “academic” degree:
Olson is based in SVB’s New York office. She holds a bachelor’s degree in political science from Santa Clara University and a master’s degree in public administration from Harvard University.
Ok… call me a bit old fashioned and traditional, but wouldn’t degrees in something like – oh, I don’t know – finance or accounting or business management or – perish the thought – maybe even in mathematics, be of more benefit to a major bank’s financial risk assessment officer than degrees in political science and public administration from Harvard? You know… a degree in something that tells you how to read actual graphs and charts and that if a bank is holding x billion dollars in Three Card Monte Bearer Bonds and x-n hundreds of millions of dollars in deposits (which your accounting or finance degree would have told you go into the liabilities column in your ledgers), then your bank might just possibly be on the razor’s edge of some very risky business.
But wait, there’s more. Having hired Ms. Olson, the bank reveals the following about her career in finance:
SVB, the financial partner of the innovation economy and parent of Silicon Valley Bank, today announced the appointment of Kim Olson as Chief Risk Officer (CRO). In this role, Olson will lead the Risk function and team, developing and maintaining SVB’s risk management framework and a culture of risk management across the company.
“Kim’s deep and multi-faceted financial services experience as a senior risk leader and former regulator and bank supervisor positions her perfectly to actively manage SVB’s financial and non-financial risks and to build and scale the firm’s risk management capabilities through our next phase of growth,” said Greg Becker, president and CEO of SVB.
With $213 billion in assets and more than 8,200 employees globally (as of Q3 2022), SVB’s mission is to increase its clients’ probability of success. SVB provides innovators, enterprises and investors with the services they need to succeed via four complementary businesses: Silicon Valley Bank, SVB Capital, SVB Private and SVB Securities. In 2023, SVB celebrates the 40th anniversary of its founding and four decades serving investors and the innovation economy. The company is located in nine countries and is widely recognized as a champion of the innovation sector, a leader in corporate social responsibility and a great place to work.
Olson has thirty years of financial services experience. She joins SVB from Sumitomo Mitsui Banking Corporation (SMBC), where she served as the Chief Risk Officer for SMBC in the Americas, and an Executive Officer of SMBC and Sumitomo Mitsui Financial Group.
Prior to SMBC, Olson held senior risk management roles at other leading global financial institutions. She also has rating agency experience, as well as experience in professional services advising large- and medium-sized financial institutions on evolving regulations, risk management and stress testing following the 2008 financial crisis. Olson began her career at the Federal Reserve Bank of New York, where over a period of 10 years she held a variety of senior policy, regulatory and examination roles in banking supervision.
Hummm… you don’t say… Sumitomo Mitsui Bank? Ratings agency experience? Financial stress testing? The New York Federal Reserve?
With degrees in political science and public administration?
You just can’t make this up folks.
Gee… I don’t know about you, but if this represents the type of hiring policies pursued by SillyCON Valley Bank, perhaps it is no wonder the bank went belly up. It’s the prior resume that gives one pause, for apparently the whole banking system is more concerned with political science and public administration than with ledgers, graphs, charts, and things like – oh, I don’t know – numbers.
Ahh… but all of that was just prelude, dear reader, because what I want to talk about are those Three Card Monte Bearer Bonds (i.e., derivatives) that SillyCON Valley Bank was exposed to and that I outlined in last week’s News and Views. In the course of covering that story years ago, I noticed something “a little odd” about the numbers being reported. You’ll notice something odd happened a few years ago after the 2008-2009 financial meltdown: derivatives quickly became a major story. Everyone was talking about them, and I spent a great deal of time in my book Babylon’s Banksters covering them, pointing out how the whole derivatives trend had started with some financialization of financialization, derivatives of derivatives and bundles and tranches of bundles and tranches of what were, at heart, mortgage-backed securities and credit default swa(m)ps and so on. In short, the “business model” became a kind of sophisticated three card monte game. But it was never anything else more or less than three card monte. Before too close a look could be had, everything else quickly became financialized: weather derivatives, pandemic bonds… you name it, it was all financialized, in an effort to keep the original derivatives bubble afloat. Then talk of derivatives suddenly subsided, everyone took their “quantitative easing” and was happy. Estimates came out, however, for those curmudgeons like me still following the derivatives story, that the derivatives were … well… I’ll let you read what I blogged about it back in 2013 here:
