announcer: Funding for "The Hinckley Report" is made possible in part by the Cleone Peterson Eccles Endowment Fund.

♪♪♪ ♪♪♪ Jason Perry: Good evening, and welcome to "The Hinckley Report."

I'm Jason Perry, Director of the Hinckley Institute of Politics.

Covering the week we have Heidi Hatch, anchor with KUTV 2 News; Max Roth, anchor with Fox 13 news; and Robert Gehrke, columnist with the Salt Lake Tribune.

So glad you're here with us this evening.

Tonight's a very interesting show, because we're gonna talk about some big issues where we're going to understand them, and then we're gonna see how they're going to impact the state of Utah because they certainly will.

And I want to talk with some of the things that happened with the legislative session first.

Heidi, what's interesting here is the governor has a very short amount of time to sign bills, veto bills, or let them go into effect without his signature.

Of the record setting number of bills this year, 575, he has now signed 278 of them.

Here's the question people are asking right now.

Are there any bills left on his veto list?

Heidi Hatch: It seems to me that most of the bills that he was against, would veto, didn't make it through the legislative session anyways, and so at this point it looks like he's going to be signing all those bills.

But sometimes you get a surprise in the end as they go through and maybe look and see if there's something that doesn't quite line up with what they thought when they're reading the bill.

So, right now it doesn't look like it.

Max Roth: Yeah, and I get the sense that as he's talked about this, that he--his reasoning that he's presenting to the public for not vetoing is that there were some in their original form that he would have vetoed.

Notably, he talked about a bill that said that teachers in public schools could not teach that people from one ethnicity or race were superior to another.

He said he had some initial qualms about that, but it was amended, and so he's not going to veto it.

And so, that suggests to me that he wants to say, well, I was ready to veto, I was ready to be tough, but I didn't have to be.

Robert Gehrke: I think he said initially there were almost 30 or 3 dozen bills, 35 bills, that he was--that were on his hit list.

They were the bills that he was worried about, that he would have vetoed if they passed in the original form, but, you know, you've been through the system, you know how it works.

They get watered down, some of them die along the way or just don't, you know, don't mean anything by the end of it.

I also think the governor is in a tough position, because the last time he did exercise the veto, he got just steamrolled.

And so, I think there's a little bit of maybe reluctance to do that.

If he's going to use that veto again, it's got to be something he knows he's going to stand up and he's got to feel pretty strongly about.

Jason Perry: Yeah, he mentioned that he felt like he got involved early on and stayed involved, and that's why he doesn't have any vetoes.

There's one interesting bill remaining that may have a referendum, Max.

Can we talk about this for a second?

The state flag is so interesting that everyone's talking about the state flag on both sides of this issue.

But regardless of one's opinion, there is a referendum effort underway, and the organizers of this group have to get just under 135,000 signatures by April 12.

Max Roth: Yeah, and it's really--that is a big lift, because I'm not sure there are-- there are some people who are very passionate, they love the current state flag, they think there is dignity to it, and the seal, and it has history, but are there 135,000 people who are passionate about it?

At least passionate enough to sign it.

Yeah, I--Heidi said no, and I think that that's likely true.

You know, I don't think there are that many people who focus so much on the state flag, and when they do, they will see this flag, this flag, and they'll-- probably a lot of them are going to see the new one and think that looks more flag-ish.

Robert Gehrke: I think there's no way they're gonna get the signatures they need.

But I also--when we had the last referendum, when they passed the big tax bill and groups went out and gathered signatures, that was still also very much a grassroots effort, and they managed to get the signatures, and the legislature knew they were beat and, you know, folded their cards, basically repealed the bill.

I don't think that's going to happen this time, because like Heidi says, I just don't think there's the same sort of passion, the visceral anger about this, and it's hard, it's hard to organize that.

You got to get it in 26 of 29 counties, so you've got to get people all over the state out there doing this.

It's really hard to do.

Max Roth: And usually expensive too.

Heidi Hatch: And there's not money involved in the flag, it's not the food tax, it's not something that gonna make people say, I'm going to get out and use my spare time to go get signatures, cost money, takes time, and it's a matter of weeks.

It just doesn't seem realistic.

Jason Perry: Well, I'll tell you what, Heidi, money is going to be a little bit of our topic for the next couple of minutes on this show, because we have a couple big efforts from the state, but let's talk about a big one nationally.

Robert, let's start with you, you've done some great reporting on this, a great column this week on Silicon Valley Bank.

About what you said is they dodged a banking disaster.

Why don't we talk about that for just a minute, what happened?

And then the implications for the country and particularly the state of Utah.

Robert Gehrke: Yeah, the bank that most of us hadn't heard about until it almost wrecked the economy, right?

This bank kind of grew up with Silicon Valley startups, right?

They specialized in providing the type of banking tools and services that these Silicon Valley companies needed, and so it--most of their accounts were really large, 95% of them were over the $250,000 limit.

Two hundred and fifty thousand dollars, an important number because that's how much the FDIC will insure if a bank collapses.

And so, when they had invested most of this money into treasury bonds, which are sort of longer-term investments, and when the--when they couldn't sell those bonds off to cover the withdrawals that they suddenly started having, it created a run on the bank, and word spread like wildfire via Twitter and other social media that the bank was in trouble, and everybody went and took out--I believe it was $40 billion disappeared from this bank in a matter of, you know, hours.

And so, the FDIC had to step in and shut it down.

Well, the problem that's created for Utah companies in particular is that there are several hundred Utah startups that have thousands of employees that were relying on getting that money out so they could make payroll, and so they found themselves in a real predicament in--for the span of about three or four days there was real uncertainty about whether or not this was--this bank was going to survive or if the federal government was going to step in and bail it out.

Max Roth: You know, we had--our reporters were talking--and grateful that he was willing to talk to us about it to give some context, the founder of Kickstart here in Utah.

And who said what Robert just said, that there was real concern about payroll, about being able to pay a whole lot of employees.

And so, there was that potential Impact.

We didn't see it happen, but I think we all found out that there was real nervousness behind the scenes for a few days.

Jason Perry: Right, and Heidi, go ahead, please.

Heidi Hatch: I was gonna say, Utah's pretty tech heavy right now.

When you think about where all of our growth has come in recent years, it really is in that tech sector.

So, there was a lot of businesses who were very nervous, especially over that weekend thinking, can you make that payroll?

And then there comes the question of the $250,000, and if they had more than that in the bank, you know, and that's what's FDIC insured, can businesses really run the payroll if they have more than or less than that?

And that's a big question of, you know, where that risk goes in, can you make the payroll, pay your families?

And it matters, because when families in Utah can't make their mortgage or can't buy their groceries, there's a big domino effect to the rest of us here in the state as well.

Jason Perry: Talk about the impact in Utah, and who was part of this too?

Because we have our own sort of--we have our Silicon Slopes.

We have a very strong high tech industry here, and many of these, particularly the startups, had their connection to this bank.

Heidi Hatch: Yes, and it was interesting that the Silicon Slopes really came together.

And I think that's a strength here in Utah where they were able to come together, they had a meeting, they had thought leaders, they had all these businesses, they had our senators, even some of the banking members of the community get together, talk about where they were, what needed to happen next, and I think that support was certainly helpful of some of those businesses that maybe you aren't going to see in other states.

Max Roth: You know, it's interesting that some of the corporations that we now think of as pillars of the economy, you get a reality check when something like this happens.

You think, we hear for the first, you know, couple decades of its existence Amazon didn't make a dime, and yet it employed a whole lot of people.

What does that mean?

Well, it means that there--that it's finance that's getting them through and that the payroll of all those people depends on them being able to have liquid money available from financers, and that still is the case with so much tech right now, especially when we talk startups.

Jason Perry: Exactly, so, Robert, what's interesting is people are starting to talk about who's to blame a little bit here too, and people are pointing to 2018, there's some deregulation of this particular industry, and people know that phrase too big to fail, because we went through some of that.

Now people are talking about some of these banks as being too important to ignore.

Talk about those two things particularly as you see the political aspects of this issue.

Robert Gehrke: Well, it's kind of interesting, cause Silicon Valley Bank was apparently a bank that was not too big to fail until it did, and then it created a crisis.

And so, the big change people were talking about from that 2018 bill was it took the reporting threshold, they have to do stress tests and have liquidity requirements from $50 billion to $250 billion, and Silicon Valley Bank was about $210 billion in assets, so it didn't have to do those stress tests and have the liquidity.

And so, now there's the question about, did we create the environment where this could happen?

You know, but there on the flip side of that, they have people like President Trump, you had Senator Mike Lee tweeting about how diversity, equity, and inclusion, and environmental, social governance scores were part of the reason that this bank failed, which I think is-- I don't see the connection between that personally, but it is--whenever you have a crisis like this, a banking crisis like this, it does spin off these discussion about whether we need better regulation, more regulation, if we have it right.

Fifty billion, frankly, seems kind of low.

I mean, there's a lot of room between $50 billion and $250 billion in assets, and maybe you set it at $150 billion or $200 billion, but that's a discussion that I think is going to transpire in Washington.

Jason Perry: I wanted to show a question that was submitted to us from one of our students at the University of Utah.

And, Heidi, I hope you'll take this one here in just a moment, because it's the broader view of this issue and what might happen next.

Let's see this question.

Kathryn Calderon: Hi there, my name is Kathryn Calderon, and I am a Master of Public Administration student here at the University of Utah.

My question today revolves around the recent collapse of the Silicon Valley Bank.

Do you believe we will see any of those impacts here in Utah?

And if so, how do you think those impacts will look?

Thank you so much.

Jason Perry: Let's talk about going forward.

Heidi Hatch: Well, I think there's a lot of different impacts.

You already see Zions Bank, which is a giant in our community, that I wouldn't use the word falter, but it had a bit of a wiggle and a little bit of a scare this week.

So, we see that, you know, giant pillars of our community may be affected by this.

And then you look at the smaller tech startups, and those tech startups create jobs for other people.

We've been talking about that, and I think that when you don't have this bank around, SVB anymore, it really catered to some of those smaller companies who needed someone to have faith in them and give them the money to get started.

And so, the question is, is it going to be harder for some of these startups to get going when they don't have a bank that specifically caters to them?

Will it be harder, and then will it maybe make the other businesses tougher when they have to bank through someone else who maybe holds them to different or higher standards?

So, I think there's definitely going to be effects.

I am not a banking expert, and so I'm watching this like everyone else, wondering, you know, what is going to change?

And there will be changes, and I hope that businesses look within and figure how to make sure that this isn't something that happens again or happens to them.

Max Roth: And, you know, a banker faces--I'm very glad I'm not a bank CEO despite the difference in income between me and one of them, but when--even for a traditional bank, which Zion would call itself more than, like, Silicon Valley Bank, especially a week like this, they want to emphasize that.

They have to thread a needle, because they have to try and understand what new companies are going to work, because they, to be profitable, they need to have their--they need to finance companies that will succeed in the future, right?

So, a traditional bank has to live on that razor's edge.

Zion a week ago today was trading at just over $40 a share.

Today it's at $31 something a share, at least it started today at $31 something a share.

So, even though they faltered a lot more than that at the beginning of the week, and they've come up, that's still substantial, about 1/4 of their stock value still went away this week.

Robert Gehrke: I think an important point that Scott Anderson, President of Zions Bank was making when this was transpiring is Silicon Valley Bank was all in on Silicon Valley, hence the name, right?

Zion's, he said, is more diversified and spread across multiple states, multiple sectors of the industry and multiple industries, and so it makes it a little bit more resilient to this type of thing.

That said, you know, they obviously, as Max said, they felt the consequences of this.

Now it seems to be stabilizing, but, you know, going forward you have about one in seven jobs in the state of Utah are related to the tech sector, not directly necessarily, but they are tech related.

And so, yeah, it did have the potential for some real fallout.

And I think going forward, these companies, these banks especially have to look at diversifying, companies probably need to look at having banking with different entities so they don't have all their eggs in one basket, and I think it also kind of signals maybe some weakness in the tech sector.

I mean, we've been waiting for a correction for a little bit of bubble to burst, and, you know, we've seen layoffs, but not massive layoffs, and maybe, you know, it's--maybe there's some weakness in that sector.

Jason Perry: Let's talk about where people are putting their money, because you brought up a moment ago, Robert, this issue that was connected to Mike Lee was talking about it.

It's this acronym, ESG.

I think we should take a minute on this, because it's going to be an election theme, I believe, and certainly is happening with the Republican Party in particular.

ESG stands for Environmental, Social, and Governance Investing.

This is talking about how do we make decisions about where we put our money?

Heidi, let's talk, let's start with you for just a moment on this one too, because it has this idea, you know, our legislature thought, well, the rules should be you put your money where it has the highest maximum potential return.

This is not what this is about though.

This is about other considerations.

Heidi Hatch: That's right, the considerations, I think a lot of people like to use the word woke.

I'm sick of the word woke, but it was looking at investing in companies that maybe were green or did things that were to save the environment or headed in that direction, but I think the question comes after the bank failures, do you want to be putting your money or those funds into companies that have specific ideologies, or do you want to diversify and make sure that it's, you know, where the money is going to be best spent or best earning?

And so, I think it brings up questions of, you know, what way is the best way forward in the future?

And I think in the last few years, maybe in the last decade, there really was a push to go towards some of those companies that were, you know, maybe trying to rock the boat or change the world, and maybe that's not where all the money should go.

Interesting--go next.

Max Roth: You know, I think that it's interesting because it's one of those issues that is going to be answered differently depending on how you phrase it.

So, do you believe the government should decide how they're going to invest your tax dollars just by what a company thinks socially or environmentally?

A lot of people would say no, I don't think that's a good idea.

But if you say, do you think the government should invest in a company that has big ties to Chinese Communist Party?

Or do you think the government should invest money in a company that mines diamonds, and they don't guarantee that children aren't a part of it in Africa?

Or back in apartheid era, was it okay that people divested from South Africa?

You ask people that way, the answer's likely to be different.

So, it's not--so it's just not a black and white issue it seems like.

And it's very easy to draw that line.

Jason Perry: This legislative session, Robert, was interesting.

There were 35 different pieces of legislation that were requested dealing with ESG.

Just shows you where this issue might be.

Four of them made it into bills that were introduced, and I first want to read this quote from the governor, Governor Cox sent a statement to the President of United States about this.

I want to read this quote and have you talk about where this might be going in Utah, particularly with the legislation that was passed.

This is the statement that was in the letter from Governor Cox to the president.

He said, "We as freedom loving states can work together and leverage our state pension funds to force change in how major asset managers invest the money of hardworking Americans, ensuring corporations are focused on maximizing shareholder value, rather than the proliferation of woke ideology."

That's how this is being framed.

Robert Gehrke: Yeah, I agree with Heidi and Max said, woke ideology, I don't even know if they--if anybody can define what woke ideology is anymore.

I--the part I have a problem with, with the governor's statement, frankly, is governments can invest their money how they want, and as Max noted during the '80s, there was the big divestment from South Africa to help bring down apartheid.

It's--it can be a force for social good, right?

Governments can pull money out of these woke funds, whatever that they think are using these ESG principles, but where you cross the line in my mind is when you start having them tell investment managers that they can't offer certain products or telling them that they can't take certain factors into account.

If you're investing in the energy sector, you're not--and you're not going to invest in coal because coal is a bad play because it's fading away while solar is rising, then that's-- is that woke?

I don't know.

I mean, I don't think it is.

It seems to me to be a good long term investment strategy, but when you start telling these companies what they can and can't do in the force--in the-- in their course of their business, that doesn't seem like a very Republican ideology to me.

That doesn't seem like it's a limited government ideology to me.

Jason Perry: Of interest, Max, this bill was Senate Bill 96 on this fiduciary duty modifications.

The phrase that was used here and how it says state funds should be used, which includes what we traditionally think in state funds, but also maybe endowments, universities, other sorts of places, said that it would ensure that funds invested by any government entity in Utah are managed, and this is the quote, "With the sole purpose of maximizing the risk adjusted return on the investments."

That has to be the primary, and not the funds-- Max Roth: Not just primary, sole, only.

Sole means only, right?

I mean, that's a--that's a very--that's a--that's quite a bar to place on it.

And, you know, legislation is a blunt tool, and then there's legislation that is intentionally blunt, and when you say that something is going to be the sole purpose, then you're telling your own state employees that they can't take other factors into consideration that may have to do with something other than--when you talk about long term investments, that sort of thing, it may be that a coal company is about to--is about to be sold, and so their stocks going to go up in the immediate term, but you might not have faith in the long term.

And so, what does sole purpose mean at that point?

And do you let people who are professionals do what they have trained professionally to do?

Robert Gehrke: Representative Ken Ivory had a bill, one of those that didn't pass, that said that any individual or company that denies anybody capital if--because it's a gun company, a coal, or oil company, or because of their viewpoints on abortion can be sued in court, that an individual right to action and get treble damages from that.

And you think about how far this could go.

Now, obviously, like I said, that bill didn't pass.

It goes a lot further than this bill would have, because that gets into person to person commerce.

The banks in Utah were really freaked out about this and pushed very, very hard to try to get these to a place that they felt like they could live with, and they did at the end of the day.

But, you know, it's this thing that they--I think people need to understand when you're dealing with the economy, when you're dealing with the financial services sector in Utah, which is the largest sector of the economy, you need to be very, very careful in how you tinker with that.

Jason Perry: Of note, our Treasurer, Marlo Oaks, Heidi, has made comments about this over the past couple of years.

In fact, last year pulled $100 million of state funds out of Blackrock, which had some ESG approaches to investing, and he had some interesting comments just this week with the Republican Party Convention about this issue.

Heidi Hatch: I can't even remember the exact words, but it was something about Satan's-- what was his quote?

Yeah, Satan's plan.

And so, obviously people have strong opinions about this, and I think it goes back to what we've been talking about, banking and ESG and everything, that you really have to have people in place who know what they're doing.

They have to be risk managers.

But you also have to remember that every risk manager has its own bias or their own bias, and so we're never going to have a perfect system out there in how you look at it, especially when you look about--we've been talking a lot about energy, and we see what's happened in the last year.

If you were more of a cold person or green energy or nuclear, I don't think any of its ended up where we thought after the crisis we've kind of seen in the last year.

So, I think there are a lot of imperfect people trying to make these plans and trying to put them in a box with these laws of you have to do it this way or this way is very tricky.

It's hard to understand exactly what it would do or why it would do it.

Robert Gehrke: I just think it shows the superheated rhetoric around this issue, and even if people don't necessarily understand what it is, what woke investing is, how it's going to play out, if you start throwing around terms like it's part of Satan's plan, and he frequently goes to it's part of the communist system, you know, it's--it shows how much people care about it, and this was a group of delegates, obviously, Republican delegates, and so it's an issue, like you said, at the outset, I think it's going to be one that people care about a lot going forward, and will be part of the 2024 campaign.

Max Roth: And does it signal seriousness about the issue, or does it signal not being serious about the issue when you start invoking these kinds of terms?

I mean, I guess if you actually believe that Satan, some supernatural force, is actually behind this thing, then say it.

Robert Gehrke: If that's the case, I think Satan needs better plans.

Heidi Hatch: It gives him a lot of credit.

I think some people do think that, you know, scripturally that there might be something to it with Satan's plan or whatever on the other end.

But who knows?

Max Roth: But they're fighting words, you know?

If that's what you're going--if that's the way that you're going to take the conversation, then you're kind of--you're taking it off the table for a conversation.

Robert Gehrke: It's not an appeal to logic, it's an appeal to an emotion.

Jason Perry: Okay, let's transition for just a moment to some water news of the week.

Heidi, this was a big one.

We're all talking about the Great Salt Lake, our legislature has put $100 million, I guess it's almost $1 billion dollars into this particular issue recently, but this was a big week also when the Church of Jesus Christ of Latter Day Saints announced they were going to donate 5,700 water shares permanently to the Great Salt Lake.

Talk about that, how impactful that might be.

Heidi Hatch: Well, I certainly think it's impactful, because we need that water, and the big question is, has the LDS church been using that water to farm, or is it just water that they're keeping because it was grandfathered in and it's either use it or lose it?

So, this water is a small reservoir full, which won't save the world, it won't change everything, but it is drops in the bucket that we need for the Great Salt Lake, and it shows that they're serious about it.

I think a lot of people have been asking, you know, what is the church going to do about it?

Are you going to let your lawns die, or what are you going to do to help change this problem and make it better?

And so, this is a way of them saying, we're here to help.

This money will go in--not money, but water, which is also money, in perpetuity to the Great Salt Lake.

So, I think it matters, and I think that it's--I forget what the cubic feet is, but I think there's 20,000 of whatever it is.

And I think that each household, if you live in suburban Utah, probably uses the equivalent of one, so that's 20,000 households of water per year that they're sending now to the Great Salt Lake.

Jason Perry: Max, this is the equivalent of the Little Dell Reservoir.

Max Roth: You know, I love to take my canoe to Little Dell Reservoir.

It is a gem.

But, you know, I put in the paddle, and from one end to the other takes about 15 minutes.

So, it's a wonderful place, and it is an important gesture.

It's saying exactly what Heidi said, that they're serious, and we'll watch for those next steps because they have a lot of lawns in the state, and I'm sure that they're thinking about what they're gonna do with that.

The Great Salt Lake is-- it's on globes.

I mean, the Great Salt Lake is an inland sea, and I've had my canoe on the Great Salt Lake, and it is humbling, and it's kind of terrifying, because you look out and you can't--you can't see beyond the horizon.

It's all lake.

And so, it's--so it is a drop in the bucket, but it's a significant message with a drop in the bucket.

Robert Gehrke: Now the lake's only about 6 feet deep all the way across.

Not quite, not quite as risky.

I think it's great.

I mean, you have--you need to focus on the big players in this, and the church has as much or more water than anybody in the state, so the fact that they're coming to the table and ponying up I think is fantastic.

And the legislature in the last session started really looking at agriculture.

They're looking at metering secondary water, but there's $200 million for agriculture optimization.

Agriculture, as we talked about on the show before, 75% of it uses 75% of the water in the state, so if you're going to get your hands around this, it can't be talking about whether or not we water our lawns or how long we take showers.

That's not going to change the game.

It's got to be these big players like the LDS church, like looking at agriculture.

Jason Perry: This is certainly an issue that we're all watching very closely, everyone's going to have to do their part to address the issues of the Great Salt Lake.

Thank you so much for your great comments this evening.

Very insightful on some big issues we'll see going forward.

And thank you for watching "The Hinckley Report."

This show is also available as a podcast on PBSUtah.org/HinckleyReport or wherever you get your podcasts.

Thank you for being with us.

We'll see you next week.

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