Transcript
Live from hey puddle Town. Yeah. Another manic Monday edition of business pants. Puddle town, you didn't get a lot of rain, where you were. I we did. I just had no idea. There was no references, there's no context for this. Anything I said. It's usually arbitrary at best join today, but the lord of the BS Sports Saint Mary metrics and bulshit Matt mascardi. Oh, how dare you? In today's Wok Box called May 1st 2023. That's May Day. Sexy story updates and Banks. Oh, well, that's a bank more Banks. The banks just won't go away. Well, my promise me a two-page. Oh, you're promising me a big report on. The latest bank failures so they don't big so they oh okay. Okay. Well but still where we're gonna find that by the way before we float dot LLC you can get a quick or hot take if you want to know what I'm going to say. If you want to read, what I'm going to say on the show, it's already up. This is starting up, do it? No, no, we're formatting it. Now, it'll be up by his time to shows up ready and which case? Yes, it's already up ready for this. Yeah, yeah, let's do this thing. That music does make me excited. If your name is pivik Ramos Swami, you be proud of me today, and Vivek wouldn't be because I did a lot of self-editing. Needs to self edit. He just starts talking and doesn't stop. He did go on in our in our in our nanosecond. Vivica update. Yeah, he was on unintentional MSNBC with Chuck Todd and which you pulled the greatest headline that he's giving yet. Which is Vivek ramaswamy plans on replacing the FBI with the FBI. Yeah, the the world's number one anti-esg Crusader also when asked how he was gonna reach both sides of the aisle in the country responded by talking about how trans people have a mental illness, like that was his That was his I'm not I'm not kidding you. That was I know you're not immediate and so this is the shape and form and face of the anti ESG crowd. Let's move bridge, that divide that out, we were here ever. First story. Monday morning. Oh man, a Fed report on the svb collapse Silicon Valley Bank. Yeah, everyone loves a good fed report. Here's what they cited mismanagement. Hello. That's where we come in and supervisory failures compounded by a dose of social media frenzy. Don't you love that a dose of social media frenzy that like seven milligrams of social media Friendzy Michael Barr the feds taught Bank supervisors had factors included Bank Executives, who committed textbook failures and managing interest rate risk? That's kind of what our take was. No, no, it wasn't, I mean, well, yeah, Texas. They had no risk over right. The managing interest rate risk. I don't think the textbook failure. He's talking about, is the not having any risk experts. He's saying, they didn't bother to manage interest rate risks. They took too much interest rate risks. Well, we said was that it's easy to take more interest rate risk. When you have no risk, Experts saying different influence same difference. Yeah right here's the quotable social media. The combination of social media, a highly networked and concentrated depositor, base, and Technology may have fundamentally changed. The speed of Bank runs social media enabled, depositors to instantly spread concerns about a bank run and Technology enabled, immediate withdrawals of funding with all that said. I read that they're gonna make. They're going to write that down as a note for future consideration. Not really, I'm serious. Well, I'm disappointed that in nowhere in the report and I read most of the report did it say Tech Bros or founder fetishes or it didn't say that anywhere. It didn't say white Silicon Valley, dudes in sandals like know where did I mention that? That seems important to me. Next big story. This big story of the morning when we woke up. JP Morgan is buying. I think that's a weird. We used the word buying is buying First Republic Bank, after it was taken over by Regulators this marks. The second largest failure in US US banking history, First Republic. What was the first? Maybe our adventure eventual, failure. That'll be allergist. I think free float, the non Bank entity, the FDIC estimated the cost to its Deposit. Insurance Fund will be about 13 billion dollars his quote from Chief Mueller. Jamie dimon the CEO of JP Morgan, he said Our government invited us and others to step up and we did, that's a hero moment. He's a hero. He actually is famously on the record of saying, he's not that interested in and doing it again. Because he got held over a barrel during the financial crisis in some ways. He also said this, and I, and I want to know if you believe this, he said, this this acquisition modestly benefits, our company overall, I mean, this, this is a major win for JP Morgan know. They're gonna be able to turn this into to buckets of money. Now, I legitimately don't think they wanted this. Okay, I think they, I think, the FDIC said, you're the only one pressure for this, okay? So come in and do it and they didn't really want it. They already are in in with First Republic because the a number of banks already showed up the, you know, they gave him what 30 billion dollars. So they already sort of showed up the balance sheet and JP Morgan is not actually taking all of the assets or liabilities. That was important. Yes, taking none of the debt, right? Or the the liabilities, right? They're they're, they're, you know, they'll take the liability is in a bank are the deposits. So they're gonna take the deposits. Right? But they, but they are certain assets that JP Morgan was not interested. Oh, you mean like the little pig holders? Yeah, they took none of the they didn't want like the non-glossy copy paper. They only use glossy copy paper Explorer public about that shift from Staples. I know. I mean, who uses Staples anymore? He's just get the Amazon stuff beforehand. After you, I wanted to also note that this is a also represents another delicious. Probably glass glass, Cliff. CEO moment. Maybe. Oh yeah. That would be great. The acquired. First this, I'm calling this a cold glass Cliff, CEO moment, the acquired First Republic, businesses will be overseeing by JP Morgan Chase's consumer and Community banking Coast CEOs, Marianne Lake and Jennifer peep shock. So, two glasses, CEO moment, good luck with that. Wow, that is never happened. In the history of glass Cliffs. He can imagine that text. From Jamie early, in the early, in the morning. We're heading this ship pile over to you. He's your problem. I don't want it, but you got it now. All right. Now what do you have? JP Morgan. All right, here's what I got ready? Yeah. And this is drum. Roll. Wow. Yeah, um, well, there's no, there's no punchline. This is that, what are we waiting for? All right, here's what I got. There were 100. We've covered a lot of this, you know, when svb collapsed. But there are 168 large US publicly traded banks on them, there are nearly 2800 Souls 2800. People sit on the boards of those Banks. That's a lot actually company wise. That's a lot of board members. What's the average reports that school is like eight, right? Yeah. Well the average company has about eight and there were very few duplicates. There are a couple I think they were about 10 or 12 that sit on multiple Banks of that cohort, but it's not very many. And of those 2800 people, that's a high school worth of people. 102 are risk. Experts One 1002? Wow. Four percent of the stewards of the banking system in the United States. Have a background in anything, resembling bankrupt. It's almost as if it's almost as if you're in the career, The career offices at your local school. When you're studying to be a risk expert, they're telling you, maybe you don't want to become a risk expert because it makes you less likely to be hired at a bank. You know, I'm gonna dissuade you from being a risk expert. If you want to work at a bank artwork is something else. So do something else. These risk experts the hundred of them, sit on 66 Banks. So you do a quick math. If there are if I did it, he's already. Did it that have more than one? They're all the risk experts okay. 102 scary Banks. Yep, to put it another way less than half of the entire US banking system has at least one risk expert on their board. It's 39% overall First Republic. Let's get to First Republic. Yeah, 70% of their deposits were uninsured. Roughly a little less than 70%. They fit the profile of a bank that had no risk experts. Okay. And they had a Twist in that they actually had a risk committee and they stacked the committee with people who have no business, overseeing bangs at all. They included a professor and organizational psychology. He basically says, he talks about leadership a lot, okay? The head of a resale apparel company and an Affordable Healthcare Foundation, CEO. Okay. So that was the bank risk committee at First Republic. So a do-gooder someone selling old Yeezys and Professor an old Professor, the that is roughly correct. The risk committee members had a staggeringly low 12%. Combined board, influence doesn't come back compared to 42% of the board influence that was owned by Executives alone. The executives owned. 40 is the, is I'm gonna take the moron's approach here, which I do for everything, I do, which is, this is my assumption based on this reporting is that having a risk export a risk expert? Will cut down on short-term gain right for executives, right? I mean, is that what I'm sensing here? Like, they're, they're gonna make less money if there's, if they have more risk oversight, am I right? That was generally, that was the case at svb, where the risk experts, raise their hand, because they actually had one and said, not on the risk committee. But who said, oh, by the way, we're taking a lot of duration risk. What are we doing about that? And they said, we do not want to change that because it will change the stock price. The stock price is about a short term of thought as you can have. And First Republic is not the worst. I can tell you who's the worst, there are other companies who are worse than First Republic, other Banks who are much worse. Including a bank called First Citizens Bank. What a first in the bank world. Yeah, I don't know what that is. If you name yourself first, you're driving 12 first. I think first, I think it was a old-fashioned notion that, you know, grandmother is looking up Banks and foam books. I think I had somebody with that, like, it's the first one listed or know, isn't that why there's like a ton of like ABC garage, like a locksmith? Yeah, exactly. A one, a one, one, one, one, one. The greatest irony is one of the worst banks in our data. First Citizens, not to be confused with First Republic. Okay. Yeah, First Citizen. Sure. Also tagged with no dedicated risk experts. Well, 78% of the board influence is Executives. Two of those Executives, sit on the risk committee. Oh, love the remaining two members include retired, PWC Partners who work together at PWC and a mechanical like Parts contractor. Well CEO, I will say I should add this though per the listening exchange requirements. New York Stock Exchange, NASDAQ SCC all that stuff. They're not actually doing anything wrong, right? Oh no, they're not, we're Busters themselves. They're not doing anything wrong. That's the scary part, right? I mean, they're not actually skirting anything. This is just okay, this is just out there. Yeah, but in the greatest irony of all one of the like three companies or four companies that was worse than First Republic. First Citizens actually was the buyer for a number of svb, the now, failed Silicon Valley Banks. Well, they bought them According to our data, 97% of investors voted for First Citizen board members 97% on average four votes, right? Okay. 92% for votes for First Republic. Well yeah, the average for all the 54 banks that have outside executive influence and limited risk influence 93% investor credentials. They love them. Look a good shit show. Let's make this assumption that the investors are doing their due diligence and actually looking in what their voting for. I'm just gonna make the Assumption, okay? That's to be fair to them. Making yourself if they're making industry comparisons looking at their peers. This is how banks operate in the United States. So how do they know what to do? Not all of them. Okay, for instance, JP Morgan. Oh, now owner of First, Republic Bank, JP Morgan actually has not one but two separate risk experts on their board. Okay. Tim Flynn and Linda baman. Bam is actually the chair of the risk committee which makes sense for a risk expert. The risk committee JP Morgan has 20% of the board influence. They're all independent non-executive and Executives, which is just Jamie dimon, have 28% of the influences, so it's almost balanced. Jamie told me rule this board, but at least he's got powerful advisors. You can be different. So it's almost as if in our weird corporate governance nerdy world that there's some good news, right? This is almost as if this Bank should be taking over this other bank. Look, I I don't want to shower accolades on Jamie Diamond too late. JP Morgan, James JP Morgan's. Actually, what we tagged as a monarchy, which is a situation in which you have Executives on the board who are CEOs and chairs with more than 25% of the board influence and such a dispersed shareholder class that you basically who's gonna fight. It's a little King, right? So they have got a little King and In that way. But the fact is, if First Republic was going to get bought by anybody, at least they got bought by somebody who actually does risk management at a bank. I think we should be appalled that 4% of directors at banks are risk, experts. And let's not forget, yeah. Let's not forget that. JB Jamie diamonds. Son-in-law is Joey Romo? So yeah, it's another reason. He's a Joey Romeo is a different kind of risk expert, you know? So this is all so good, we're a good hands here. That's true. That's all I got on this. That's funny. That's honestly, you can't get that data anywhere else. No. So Get that here. Let's wrap up my ridiculous headlines. You ready? I love. This is now I'm excited. Former CEO of Twitter and the News Jack Dorsey in the news, criticizing Elon Musk criticizing the direction. Yeah. I know, right after all this Criticizing Elon musk's direction for Twitter saying he should have walked away and paid a 1 billion dollar breakup fee, right? He was asked, if he thought Elon had been doing the best possible was the best possible leader for Twitter. Dorsey said no, he cannot say no. Yeah, what you did. He also said, nor do, I think he acted right after realizing his timing was bad? Nor do I think the board should have forced to sail it all went South. Matt this is the same guy that said, Elon is the singular solution. I trust, I trust his mission to extend the light of Consciousness that was a year ago. Only a year ago we said that about Elon to take through his own board under the bus, didn't he? He said after he left that his board was like a dysfunctional. I mean of babies or something. Yeah I guess they labeled this in corporate governance world as an Absolution show. I get that's what they call it. I think that is that's the tag. Yeah. I just want to call the story to make you feel less safe. Okay, I just want you to the sense of the octogenarians who run our world and don't really understand anything because I just thought this was cute and folksy. The headline is nuke. Launching AI would be illegal under proposed US law. Okay, this is bipartisan legislation, it's called The Block nuclear launch by autonomous artificial intelligence act, okay? This and it would prohibit the use of federal funds for launching. Any nuclear weapon by an automated system without meaningful human control. Here's a quote from one of the people back in this legislation, and I just thought this was someone who's completely out of touch with the world. And this is who's trying to save you. Here's the quote as we live in an increasingly digital age, we need to ensure that humans, hold the power alone to command control and launch nuclear weapons not robots. Oh, these are the people that in charge of saving us by riding a law. Telling AI that you are not allowed. I mean really this, I just don't feel safe. I don't know. I mean, it's like, it's like it. I think somebody just watched the first Terminator movie, what is this? Skynet could go alive. Unless we passed legislation that says, they can't. As if AI was gonna be like, oh, through this legislation. Yeah, they're gonna be like, what? I'm gonna get a fine. If I launch this new, like, what's gonna happen? I just do. I'm sorry. I had to include that. I just couldn't believe that one, that was the worst story you've ever pulled finally. Let's wrap up on some nonsensical board saber metrics data, okay? I was like to plug our product a little bit, you know, just in case. Alright, let's do it. Do you want a theme for it? Towards the most boring music you have. That's it. All right. There was a article, the 25 richest American families. Okay. Oh. So let's see what I did is, I pulled out all the most are these 25 families. All 25 of them were attached to some kind of company or, you know, some kind of Corporation. So, what I did was, I immediately pulled out all the private families. That's 14, and I focused just on the ones that we cover here. Port Saint Mary metrics, right? That's 10. Families. 10 powerful families. Here's what I found. Bored saving metrics wise, okay? Okay, the families on these 10 companies, the 10 richest families in the, you know, in the country. Represent 54% of total influence on the board. Is that that's a surprise, you Seemed about right below. I thought I would have thought it was like 60 or 70%. Well, here's the funny thing of the seven families that are still in control of their Empires, they all fall within a 70 to 79% range of influences. They're all 70s. Yeah, sure why. Why the 70s? Well because look the the weigh board saber metrics works is we we do account for the fact that, like, Peter Thiel sat in the boardroom with Mark Zuckerberg and was influential, we have to assume that someone in that boardroom is friends with them and might say, hey Gus. Look, I know you want to legislate against ai's, but that's stupid, right? And they might get through to them. So we just, we have that buffer. Also, the average tenure of these families directors is 18 years compared to seven for the rest of this. So good luck. That's all I'm gonna say. Good luck. 18 years. So they're tenure can legally vote? That's a really all, it's all I really have. That's it. I want to get into the Weeds on this. I don't one weed. The one weed that I found was that okay? The give me one weed. I'm gonna I'm gonna stammer a little bit here that I saw and you go ahead. The weed I saw is that they largely are billionaire families. In like two industries. Chemicals and food slash booze. Well, what we characterize that as basically as drugs. Yeah, it's anything that addicts, the American Consumer, they've gotten us fat and then they zap things with chemicals. You know what, they put makeup on you. They feed you some alcohol. They make you watch TV like that. So that's what they do. It's really the most fascinating thing. It was what it says about American family. Well, is we build the wealthiest families in the country by sedating the rest of us in some way? Well, it makes sense and that way. I would. Yeah, that's I mean, it's a disappointing end to what spectacular show. That's all we got. That's Damien raw, as I'm Matt. Scotty, we are free float. If you want that paper, we did a paper on. Yeah. Where do they get that? Not a bank crisis, it's a people Crisis. Get on our website. I'm gonna also put it on social and crib it, and put in different places. So, look for me or us on social and it'll probably be in our newsletter at the end of the week or early next week until the next show corporate theater tomorrow until then, goodbye.