Ro Khanna’s Progressive Case for Saving Silicon Valley Bank

One thing that Ro Khanna, a U.S. House member who represents parts of Silicon Valley, has learned about trying to organize relations between the Democratic Party and tech billionaires is that it is often easier to leverage the narcissism of founders than to disabuse them of it. “You have to understand the mind-set of people who are entrepreneurs,” he told me recently, over lunch on the Hill. “They think their destiny is to change the world.” Founders might be egomaniacal, lacking humility or a sense of proportion, he went on, but “you need that in the context of what it takes to build a company from the ground up.” At the same time, he said, a personality type focussed on destiny can tend toward fatalism and panic when things go sour. “If you didn’t have that sense that the sky is falling, our company is going under, I’ve got to do everything I can, you wouldn’t have the Valley,” Khanna said. “Steve Jobs was that, times one hundred.”

Over the past decade, Khanna has followed a unique trajectory in American politics, from a stalwart of the antiwar and Bernie Sanders campaigns to a more idiosyncratic role as an interlocutor between the Valley, the Democratic Party, and the progressive movement. (“Don’t forget the fourth estate,” Khanna said, with a laugh.) In addition to a palpable interest in higher office, Khanna has homed in on what might be called élite-mass relations—how to manage the policy and reputation of the Democratic Party in a way that bridges the needs of the tech entrepreneurs he represents and the many working-class Americans who have grown alienated from a party that is often accused of working only for the wealthiest and most educated. For all these reasons, when a political crisis involving the Valley hits, it tends to find its way to Khanna. Also, Khanna tends to find his way to it.

On the evening of Thursday, March 9th, Khanna was deluged with texts and voice messages warning that Silicon Valley Bank was about to go under. Khanna knew a bit about S.V.B.—“a bank that was nice to entrepreneurs and would give them a line of credit, and where the V.C.s and tech investors told you to put your money”—but he hadn’t been aware that it was in any kind of trouble. Now, Khanna recalled, venture capitalists and tech leaders from back home were forecasting doomsday scenarios: “This is going to be ugly, there is going to be a run on regional banks, you are going to have startups that can’t meet payroll, this is going to be a devastation of the information economy.” Many of them added that it was imperative for the government to step in by the next morning to secure all of the deposits. “I said, ‘There’s no way this is going to happen Friday,’ ” Khanna recalled. “The big sense I got was, this is gonna move much faster than the government realizes.”

By the following morning, the imminent collapse of S.V.B. was front-page news, and the contours of the crisis were widely known: the bank had accumulated enormous deposits. It had heavily invested those in Treasury bonds during the low-interest boom of the past few years, and had spectacularly failed to hedge against the risk that interest rates could rise. When they did, and customers learned about the bank’s position, they withdrew their deposits en masse, investors abandoned the bank, and a broader panic set in. Khanna, phoning around Washington, tried to make sense of the politics of the situation. In general, he noticed a reticence to act with the speed that the tech industry thought necessary. The impression was, Khanna said, “Barack Obama got into office with sixty-per-cent approval, he didn’t put the bankers in jail, his approval fell to fifty per cent. We need to be sure that, whatever we do, this isn’t going to be seen as bailing out Silicon Valley fat cats.”

That evening, Khanna’s office held a video call for a few hundred of his influential constituents. Not all of them were the kind of Silicon Valley fat cats that Democrats were wary of associating with, but many were. The call lasted three hours. Khanna tried to ease the sense of panic. “I wasn’t going to say that this would kill Silicon Valley,” Khanna told me. Were people on the call saying that? Khanna replied, “I mean, that’s what they were emoting.”

The federal government, for better or worse, was not emoting. On Saturday, Khanna was at Washington, D.C.,’s annual Gridiron Club dinner, where Secretary of State Antony Blinken was delivering White House-friendly jokes about Biden’s folksiness. (“President Biden called me up and he said, ‘Tony, on China policy, my mother used to say . . .’ ”) In the audience, Khanna ran into Steve Ricchetti, a senior adviser to the President. Khanna made his case for the federal government to guarantee all deposits before the banks opened on Monday. “I said, ‘Steve, this is serious. This is what we gotta do,’ and he was, like, ‘Yeah, yeah, I know.’ He got it—he got the urgency.”

That heartened Khanna—at the highest level, at least some people saw the issue as he did. Less heartening was a call that F.D.I.C. officials held with the House Democratic caucus at eleven that evening. The plan, the officials said, was to guarantee fifty per cent of uninsured deposits—if you had ten million dollars in the bank, you’d get five million. “That would not have calmed things,” he told me. “There would have been a run on the regional banks.”

The next morning—Sunday, March 12th—Khanna was scheduled to appear on “Face the Nation” after Janet Yellen, the Treasury Secretary. Before the broadcast, according to Khanna, he told Yellen’s deputy, Wally Adeyemo, that he would criticize Yellen on the show if she didn’t announce that the government would guarantee deposits. “Wally said, ‘The Secretary is just not there yet.’ ” On the program, Yellen said that she had been working with regulators all weekend to design a solution, but that she could not “really provide further details at this time.” Khanna appeared next, and stressed the need for a response that had “more clarity and greater strength.” Then he said, “Here’s the point. All of the legislation we passed in Congress—the I.R.A. to tackle climate, the chip sector to bring semiconductors back—it relies on the innovation pipeline, it relies on the tech pipeline, and that is why this is such an important issue.”

A few hours after the broadcast ended, Yellen announced that the federal government would fully insure all deposits before markets opened the following morning. Khanna’s view is that his own appearance, and some tweets by the former Treasury Secretary Larry Summers, helped close the deal. (“Every person in Treasury and the White House, even though they don’t admit it, reads every single tweet he puts out,” Khanna said.) The official, and perhaps more plausible, explanation—in the Times, and offered by government officials—was that the White House and the Treasury had been moving toward this decision on their own, and that it took until Sunday for all of the relevant bureaucratic entities to come to agreement. But the effect was that the deposits were guaranteed, the Biden Administration did roughly what the Valley wanted, and the Party bent a little bit more toward Khanna’s vision for it.

On a recent Monday morning, the cherry blossoms snarling D.C. traffic, the financial system seemingly more or less intact, and Capitol Hill a little sleepy, Khanna arrived in his office a bit late, having flown back from California over the weekend. At forty-six, he is lanky, formal, and unusually direct about his aims for a politician. Deliberately or not, most Democrats of his generation wind up modelling themselves after Barack Obama’s composed liberalism, Bill Clinton’s pragmatic careerism, or Bernie Sanders’s activist idealism. Khanna projects elements of each. “If you take the idealistic view, you say, ‘Ro’s working toward a common national purpose that can bring us all together,’ ” he told me. “If you take the negative view, you’d say, ‘He’s just full of contradictions and paradoxes.’ ”

Khanna was born in Philadelphia and grew up in the Bucks County suburbs, where his father was a chemical engineer and his mother was a schoolteacher (both of them had emigrated from India). He attended the University of Chicago and Yale Law School before moving to Silicon Valley to work as an intellectual-property lawyer, often with tech-industry clients. On the side, he helped raise money for Democratic campaigns. As an undergraduate, he had volunteered for Obama’s first State Senate run to represent the South Side of Chicago, and, in 2009, he joined the Obama Administration, as a Deputy Assistant Secretary of Commerce. Two years later, he moved back to Silicon Valley to work as a lawyer, and eventually ran for Congress. (In 2004, at the age of twenty-seven, he had run a longshot antiwar campaign for Congress and lost badly). Khanna so well fits the archetype of the second-generation Indian American tech investor that back in California, he told me, people tend to assume that he founded a company and became rich. (In fact, Khanna is often listed as one of the wealthiest members of Congress owing to his wife’s family wealth.)

In Congress, Khanna became an early backer of Sanders’s 2016 candidacy, and, during the election, a supporter of Medicare for All. He published a book on “progressive capitalism,” and hosted town halls in Kentucky and West Virginia about why jobs had disappeared and how they might be reclaimed and replaced. Last year, Politico reported that two Sanders allies had urged Khanna to run for President if Biden did not seek reëlection, and quoted Khanna as saying that, although he would not run in 2024, there would come a time “when America will start to look to the future.”

Khanna’s congressional district isn’t the only one that includes parts of Silicon Valley, but he seems particularly attuned to how the title of “the congressman from Silicon Valley” provides him a platform to weigh in on, essentially, the future. He often indulges a hopscotching TED Talk sort of fascination with how the world is changing. Ideas will be hatched; names will be dropped. (“I don’t think the President would mind me sharing this. . . .”) In his office, he met with leaders of the Sanders-aligned Our Revolution political-organizing group, union organizers on the Starbucks campaign, and representatives from nonprofits in Santa Clara County that had been hit by the S.V.B. collapse. I had the faint sense that such a lineup of progressive worthies had been orchestrated for my benefit. But it’s also the case that, if Khanna lost his credibility on the left, and became just another corporate shill, his efforts to make Democrats and Silicon Valley work for each other would be impossible.

Ro Khanna’s Progressive Case for Saving Silicon Valley Bank
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