| | | | |  | | By Jeremy B. White, Lara Korte, Matthew Brown and Ramon Castanos | THE BUZZ: The feds may have averted a worst-case catastrophe by backstopping Silicon Valley Bank, but the fallout is still unfolding. Depositors need not fear their money evaporating overnight thanks to an emergency intervention by federal banking authorities. That swift response followed urgent pleas from both California elected officials — Gov. Gavin Newsom spoke with President Joe Biden on Saturday as California Congress members scrambled to relay constituent concerns — and the politically connected class of founders and venture capitalists who warned the economic wreckage could spread far beyond Silicon Valley. The Biden administration delivered. But the effects continue to ripple across the political world. Finger pointers in D.C. turned toward Trump-era Republicans. Biden noted “the last administration rolled back regulations” and said he’d work with Congress and regulators to tighten up again. Sen. Elizabeth Warren similarly faulted a law that relaxed regulations on mid-size banks like SVB, whose $200 billion or so in assets kept it under the $250 billion trigger for more stringent guard-rails per the 2018 law. California Senate candidates joined Warren in calling for action. Rep. Katie Porter, Warren’s protégé and choice to succeed Sen. Dianne Feinstein, floated legislation to reverse the 2018 law. Rep. Adam Schiff want to let the Treasury seize bonuses and compensation from executives of failed financial institutions. The proposals evoke the populist outrage of the Great Recession. We’ll see how much that fervor bubbles up on the campaign trail given what appears to be a lower impact. Lawmakers in Sacramento are sifting through the damage. Sen. Monique Limón, who heads the Senate Banking and Financial Institutions Committee, praised the federal government for “being responsive to the many requests and calls from California” and unfurling a safety net. “We’re in a much better place today than we were Friday,” Limón said. But while Limón noted the California Department of Financial Innovation and Protection doesn’t oversee situations like bank runs, she said legislators will be studying what they can do. “There is a lot of interest in the caucus,” she said. First Republic Bank came up in several of those conversations with fellow senators, Limón said. The California institution’s stock plunge on Monday stoked fears of financial contagion. It also caused some jitters in California campaign-land because many committees do their banking with First Republic. “We have heard from a number of clients,” political accounting pro Stacy Owens told us. But she pointed to reassurances from First Republic and risk-spreading through other accounts as reasons not to panic. And this being California, of course there’s a housing angle: San Francisco expects delays in building hundreds of badly needed affordable units, The San Francisco Standard reports. ADDITIONAL READING — The emergency bank rescue that almost didn’t happen, by POLITICO’s Adam Cancryn, Ben White and Victoria Guida: President Joe Biden began the weekend highly skeptical of anything that could be labeled a taxpayer-funded bailout. … Yet as officials worked through the weekend — mostly in open-ended virtual meetings tying several agencies together — to determine the blast radius of SVB’s failure, they concluded that failing to protect the bank’s depositors could leave small businesses across the country unable to access money needed to pay workers and keep their operations going. BUENOS DÍAS, good Tuesday morning. President Joe Biden is scheduled to be in Monterey Park today, talking about gun violence in a community that recently suffered a mass shooting. Got a tip or story idea for California Playbook? Hit us up at jwhite@politico.com and lkorte@politico.com or follow us on Twitter @JeremyBWhite and @Lara_Korte. QUOTE OF THE DAY: “Our service is completely tied to your office occupancy, more than any other agency in the Bay Area. I’m not kidding — we will not survive if you don’t bring your employees back.” BART comms officer Alicia Trost on work-from-home woes, via the San Francisco Chronicle. TWEET OF THE DAY:
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karaswisher | WHERE’S GAVIN? Isolating after testing positive for Covid-19 last Wednesday.
| | | | PLAYBOOK MEET & GREET! Join California Playbook and POLITICO’s growing team in Sacramento at Smic’s Sip & Quip on Wednesday, March 22, 2023, for an evening of cocktails and conversation. As POLITICO expands in California, we want to more frequently convene our most influential readers in Sacramento and beyond. Swing by and have a cocktail on us—you never know who you might run into! Register here. | | | | | |  | TOP TALKERS | | — Newsom’s former chief is repping Walgreens in abortion pill fight, by POLITICO’s Christopher Cadelago: “An attorney and crisis manager who served as senior policy adviser to Hillary Clinton’s presidential campaign, O’Leary is viewed in Washington’s Democratic circles as a policy powerhouse with a golden Rolodex to match. But in Sacramento, she’s still best known for another resume line: Newsom’s first chief of staff.” GIG WARS — An appeals court ended one battle over app-summoned workers while cracking the door to another. Uber, DoorDash and other such companies can continue classifying their workers as independent contractors after a court upheld much of gig economy companies’ Proposition 22, reversing a lower court. But the judges invalidated a 7/8ths vote requirement for the Legislature to enact laws letting gig workers organize. Here’s what that means. — “Burning Man fights to save its new home in the Old West,” by The San Francisco Standard’s Maryann Jones Thompson: “It’s really frightening what could happen to Gerlach,” said Dave Cooper, a Bureau of Land Management retiree who has lived in town since 2009 and serves on the board of Friends of Black Rock/High Rock, a conservation group that is a co-litigant in the case. “The proposed development could be larger than the town itself. And it will come right up to our outer streets—right outside our windows.”
| | CAMPAIGN MODE | | RENT PAYMENT — The AIDS Healthcare Foundation has moved another $350,000 to its latest rent control ballot initiative committee. Voters have rebuffed the previous two attempts.
| | CALIFORNIA AND THE CAPITOL CORRIDOR | | — BART’s perilous financial future, by the San Francisco Chronicle’s Ricardo Cano: “Fares have been the bedrock of BART’s financial model ever since its first trains zipped across the Bay Area 50 years ago. Next to Caltrain, no other U.S. rail agency in 2019 had a higher farebox recovery ratio — the percentage of operating expenses covered by fares — than BART.” — “Yes, the SFPD has a staffing crisis — but that's just the beginning,” by Mission Local’s Joe Eskenazi and Will Jarrett: “If, as Woody Allen said, showing up is 80 percent of life, the San Francisco Police Department is increasingly falling into the troublesome 20 percent. When you’re a cop answering a high-priority call, this is — like Woody Allen’s more recent films — nothing to laugh at.” — “Teamsters, tech firms tangle over self-driving trucks bill,” by Bloomberg’s Tiffany Stecker: “Tech companies contend the bill would disrupt ongoing efforts by the Department of Motor Vehicles to create road rules for the big rigs and trucks of the future. Unions, most notably the International Brotherhood of Teamsters, argue those regulations could portend an end to many trucker jobs, and that autonomous vehicles’ safety on the road is still undetermined.” — “California budget deficit could delay new child care funding,” by The Associated Press’ Adam Beam: “With record-breaking surpluses aided by billions of dollars in federal pandemic aid, Newsom and state lawmakers paid for 146,000 new child care slots for low-income families. That’s so many new slots — more than double what had been previously available — that state officials couldn’t fill them fast enough.” — “Commercial salmon fishing closed in California for second time ever,” by the San Francisco Chronicle’s Claire Hao: “The decision, which will be finalized next month, was made due to low numbers of adult and 2-year-old jack salmon because of the lack of water available to them in Central Valley rivers, according to a press release from the Golden State Salmon Association, an advocacy coalition.” — “Climate is changing too quickly for the Sierra Nevada's 'zombie forests',” by NPR’s Joe Hernandez: “Hotter, drier conditions driven by climate change in the mountain range have made certain regions once hospitable to conifers — such as sequoia, ponderosa pine and Douglas fir — an environmental mismatch for the cone-bearing trees.”
| | BIDEN, HARRIS AND THE HILL | | — “Biden blames Trump for Silicon Valley Bank failure,” by the Los Angeles Times’ Courtney Subramanian and Russ Mitchell: “Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Biden said in remarks at the White House before leaving for a three-day visit to California and Nevada.” — How bank failures may upend the Fed’s war on inflation, by POLITICO’s Victoria Guida: The spectacular collapse of Silicon Valley Bank, along with two other lenders, has sparked fears about broader financial instability in the U.S. and abroad. That could upend the Fed’s efforts to curb inflation by raising interest rates at the fastest pace in four decades.
| | TRANSITIONS | | — Marshall Cohen is joining KMM Strategies and opening a D.C. outpost for the California-based political media firm, partnering with Lt. Gov. Eleni Kounalakis's former campaign manager Kate Maeder and veteran strategists Maggie Muir and Dan Kully. Cohen is a Democratic Governors Association alum.
| | BIRTHDAYS | | Allen Gannett … belatedly Calvin Talbot (Congrats to mom and Anthony Rendon comms person Katie Talbot.)
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