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The story of Silicon Valley Bank’s collapse isn’t terribly complicated. A bipartisan push for bank deregulation paved the way for incredibly risky behavior at SVB. As Bloomberg’s Matt Levine explained, the bank was funded by deposits from Silicon Valley firms and venture capitalists that exceeded the $250,000 U.S. deposit insurance cap and were “disproportionately” invested in “U.S. Treasuries and agency mortgage-backed securities” without much protection in place to guard against the possibility of an interest rate hike. “But then,” Levine notes, “rates went up a lot, pretty fast,” causing the “market value of SVB’s bonds to decline by some $15 billion, to the point … its losses on the bonds were enough to wipe out almost all of its equity capital and leave it with assets, at market value, worth only very slightly more than its liabilities.”

Moreover, the depositors were—as Adam Tooze explained—“in no regular sense, depositors” but, rather, “badly run and ill-advised businesses that for obscure reasons parked huge cash balances in a highly vulnerable bank.” These depositors were also “extremely prone” to the “influence exerted by a small group of VC advisors.” Max Read convincingly argues that those V.C. advisers essentially group-chatted the bank run into existence and touched off a stampede of depositors racing to get their money out of the bank’s coffers.

The plain and simple truth of what happened to SVP has, in some corners, inspired a constructive debate about sane policy solutions to prevent similar bank disasters. But inside the right-wing fever swamp, whose denizens are so deeply invested in tying everything of importance back to the weird notions that they are constantly entertaining, there’s a different story being told about SVB: It failed because it was “woke.”

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The timing, for the purposes of this newsletter, could not have been better. Last week, I wrote about how the GOP has nearly completed its shift from a party that once diligently advanced conservative policy ideas to one that’s principally concerned with trying to invent a factual basis for its alternate reality. A prime example would be Tucker Carlson’s laborious attempt to backfill evidence for his claim that the January 6 rioters were peaceful sightseers. Then, right on schedule, came an incredible example of this phenomenon in the right’s reaction to SVB’s collapse.

As TNR’s Tori Otten reported,  a slew of conservatives—from Donald Trump Jr. and Stephen Miller, presidential aspirants Ron DeSantis and Vivek Ramaswamy, to myriad Fox News luminaries—responded to the news by making the case that wokeness was somehow to blame. This idea eventually made it to the Wall Street Journal op-ed pages, where columnist Andy Kessler mused, “In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have ‘1 Black,’ ‘1 LGBTQ+’ and ‘2 Veterans.’ I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.” I didn’t realize the right was disparaging veterans like this now.

It’s often the case that the constantly shifting definition of “woke” among right-wing thought leaders—or their hilarious struggle to define it altogether—makes it hard to get a fix on what they’re actually talking about, but in this telling it appears that these critics are mostly using “woke” as a byword for “having a diverse staff.” Unfortunately for everyone making the claim that diversity is the proximate cause of SVB’s failure, the merits of having a diverse workforce at financial sector institutions is something that has been relentlessly studied—and the consensus is that diversity is a much more profitable path.

For example, there’s a 2015 McKinsey study that found “diverse companies … are better able to win top talent and improve their customer orientation, employee satisfaction, and decision making,” which “leads to a virtuous cycle of increasing returns.” The firm’s 2019 follow-up study found that “top-quartile companies for racial and ethnic inclusion outperformed those in the fourth quartile by 36% in profitability.” A 2018 study of venture capital firms from Harvard Business Review found that diversity “significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns.” In 2023, Morgan Stanley Research examined 1,875 companies and found that those who scored better on the firm’s proprietary gender-inclusion algorithm outperformed less diverse firms. The findings, across multiple fields, are remarkably consistent.

The speed by which this omnidirectionally incorrect take about SVB failing on account of its wokeness spread was nevertheless impressive—as was the depth of its penetration: The Journal’s opinion editors have long been on a crusade to completely undermine both the specific work of its journalists and a free society in general, but it’s still remarkable to see them set fire to the paper’s reputation as the premier journal of the investor class by offering such compellingly wrong information about what practices are more profitable than others. It just goes to show that you should never doubt the extent to which the right are willing to over-leverage their reputations to make a bank run on reality itself.

—Jason Linkins, deputy editor

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—Michael Tomasky, editor