Silicon Valley Bank, the bank of choice for the venture capital and private equity crowd, is now the second-largest bank failure in U.S. history. Some $175 billion in deposits evaporated on Friday in what felt like the blink of an eye.

It was an old-fashioned bank run for the modern age—an ugly combination of rising interest rates, some bad investment bets, and an inability to meet a sudden surge in withdrawals. “[M]eaning that as the tech sector freaked out about the solvency of its favorite bank, it didn’t have the cash on hand to pay them,” writes my colleague Tristan Bove.

So, how did the bank's DEI efforts become the scapegoat?

By Sunday, Wall Street Journal columnist Andy Kessler had filed an otherwise straightforward explainer that ends with an unconscionable reflection of what went wrong.

“Was there regulatory failure? Perhaps. SVB was regulated like a bank but looked more like a money-market fund. Then there’s this: 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." (Emphasis mine.)

Let's be clear, SVP's executive leadership team and board of directors are still disproportionately white and male, a far cry from a truly diverse representation of the U.S. demographic, not to talk of globally. But we should be very clear about where this is all going: As the ESG backlash grows, many a failure will be attributed to diversity efforts.

"I mean, this bank, they’re so concerned with DEI and politics and all kinds of stuff," Florida Gov. Ron DeSantis told Fox News yesterday. "That really diverted from them focusing on their core mission.”

James Comer, the Republican representative of Kentucky and chair of the House Oversight Committee, expressed a similar sentiment. “We see now coming out they were one of the most woke banks in their quest for the ESG-type policy and investing,” he said on Fox News. "This could be a trend, and there are consequences for bad Democrat policy.”

What this nonsense really distracts us from are necessary conversations about meaningful banking regulation. Or how historically low interest rates allowed a deeply flawed venture capital system to create portfolios of unprofitable unicorns. And more to the point, how venture investors themselves, a decidedly non-diverse bunch, rushed in a herd to remove their cash from the suddenly embattled bank.

As continued attacks on curriculum, language, and inclusion initiatives put decades of diversity work at risk, things are only going to get worse.

Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com

This edition of raceAhead was edited by Ruth Umoh.

This story was originally featured on Fortune.com

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