movements, encircling us as they try to engineer some kind of pullback from the disaster they’ve created.

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It's a disaster that we’re already paying for in the heartland in terms of added federal obligations to cover bank deposits, higher taxes that will result, still-rising interest rates that are choking businesses and households, and more sand in the slowing gears of a national and global economy that is, after all, ultimately reliant on what happens in the middle of the United States, in our factories and on our farms and in our research labs.

But there’s a promising inverse to being on the sidelines for the debacle that was birthed on the coasts: As Silicon Valley folds in on itself, the resulting debilitation of the digital-tech empire, along with the crumbling of the epochal fraud known as cryptocurrency, is unleashing more financial and human capital that is now available for the growth of the heartland for the first time.

New Opportunity

What we must do is take advantage of the regional reordering of the U.S. economy that began during the pandemic and has accelerated since then.

Have no doubt that it’s the excesses of coastal financial elites that generated the crisis which has unfolded over the last few weeks. It has forced them to rely on a Biden administration that won’t allow poorly run banks to fail. And, ultimately, the rest of the country is the backstop of the banks’ inexcusable practices.

Silicon Valley Bank was vastly over-reliant on financing tech companies and serving as a primary capital provider to the go-go digital economy, profiting from borrowing short and investing long with a balance sheet that looked more like that of a money-market firm than a bank. The bank purposefully allowed as much as 94% of its deposits to exceed the FDIC limits on account insurance.

Signature Bank in New York, which state regulators closed before it could fail, was a crypto junkie. And San Francisco-based First Republic Bank, a shaky institution which has been infused with emergency capital from a consortium of panicky larger banks, mainly financed overpriced mansions for high-net-worth people on the coasts.

But we weren’t consulted on any of this. The middle of the country apparently didn’t need to be involved as these banks built a house of cards and federal regulators allowed it. Yet now we’re supposed to assent to the higher taxes, continued out-of-control inflation, and unmitigated interest-rate pressures that are going to come with President Biden’s virtual guarantee that any bank is too important to fail.

Are All Banks Equal?

Is it really the case now that just any ol’ bank that’s gotten itself into trouble will be allowed to skate? Bankers in flyover country aren’t counting on that at all.

“If this would have been a bank in Florida or Texas that was concentrated in oil and gas, or cattle, would there have been the covering of all uninsured deposits like for Silicon Valley, in a particular sector in a particular area of the country?” Craig Scheef, CEO of Texas Security Bank in Dallas, told me.

“I don’t know, but my cynical side isn’t so sure. You can touch the third rail on that. That dynamic shouldn’t exist in decision-making, but it does.”

And even as the federal government and the major New York City-based banks propped up their coastal compadres, some “experts” insisted the real lesson of this crisis was to distrust regional banks because they’re too small to be relied upon in a crunch. Better just to park all your business with one of the monstrously huge, faceless institutions on the coasts that, of course, are “too big to fail”: JPMorgan, Citibank, Wells Fargo and Bank of America,

That’s really rich: Because one regional bank playing casino-style financing games in Hubris Valley egregiously abused its position and threatened the entire global financial system, no regional bank is worth the risk for deposits and loans?

Different Kind of Banks

Tell that to the responsible managements of the strong regional banks that have anchored the economic growth of the heartland, such as Columbus-based Huntington; Dallas-based Comerica; Chicago-based Northern Trust; Minneapolis-based U.S. Bank; and Birmingham, Alabama-based Regions Bank.

We must do much more than simply tsk-tsk what the coasts have done to the banking system and the economy, by taking advantage of the opportunities that are opening up and by buttressing the truly productive industries of the middle of the country.

That means highlighting the appeal of great places for tech workers. It means taking full advantage of the EV- and chip-making industries that are falling into our lap. It requires emphasizing and facilitating the increasingly valuable roles of legacy companies that still undergird our economy. Optimizing this new opportunity for Flyover Country also will mean loosening the grip that the coasts still have on venture capital, both the recipients and the sources.

Coastal hubris created this crisis. Heartland grit and know-how will help us benefit from it.