Last Wednesday evening, Silicon Valley Bank CEO Greg Becker and his management team revealed that that they had hoped to boost $2.25 billion in capital and sell $21 billion in assets, but suffered a lack of $1.8 billion. The announcement set the stage for the bank run that followed as customers rushed to gather money from the bank. Tech startups were stunned by the news and withdrew $42 billion from SVB.
CNN has spoken to an anonymous Silicon Valley Bank worker who was described by the news site as “stunned” by Becker’s handling of the news—specifically, the final manager’s public acknowledgment of how bad the situation was, which played a task in causing the bank breakout. Based on the worker, Becker’s actions were “absolutely idiotic.”
The Silicon Valley Bank didn’t reply to CNN’s requests for comment, but Becker apologized to employees in a video message Friday.
“They were very transparent,” the anonymous source reportedly said, which is “the precise opposite of what you’d normally see in a scandal. But their transparency and honesty won them over.”
CNN quoted Jeff Sonnenfeld, CEO of the Yale School of Management, and Steven Tian, the varsity’s research director, as saying they believed the $2.25 billion capital increase SVB implemented on Wednesday was unnecessary and that the announcement of the lack of $1.8 billion might be spread over several months. weeks.
Based on Sonnenfeld and Tian, the collapse of Silicon Valley Bank was a direct results of “persistent and excessive rate of interest hikes by the Fed.” The bank publicly admitted its financial difficulties before securing financial support to weather the crisis. Nonetheless, the following panic led to billions of dollars being withdrawn from the bank.