Last Wednesday night, Silicon Valley Bank CEO Greg Becker and his leadership team revealed they hoped to raise $2.25 billion in capital and sell $21 billion in assets, but suffered a loss of $1.8 billion. The announcement set the stage for a bank run that followed as customers rushed to withdraw their money from the bank. Tech startups were stunned by the news and raised $42 billion from SVB.
CNN spoke to an anonymous Silicon Valley Bank employee who was described by the news outlet as “stunned” by Becker’s handling of the news — particularly the CEO’s public acknowledgment of how bad things were, which played a role in causing the a run on the bank. Becker’s actions were “absolutely idiotic,” according to the employee.
Silicon Valley Bank did not respond to CNN’s requests for comment, but Becker apologized to employees in a video message Friday.
“They were very transparent,” the unnamed source reportedly said, which is “the exact opposite of what you would normally see in a scandal. But their transparency and candor served them well.”
CNN quoted Jeff Sonnenfeld, CEO of the Yale School of Management, and Steven Tian, the school’s director of research, as saying they believed SVB’s $2.25 billion capital raise on Wednesday was unnecessary and that the announcement of the $1.8 billion loss could have been spread over a few years. to soften.
According to Sonnenfeld and Tian, the collapse of Silicon Valley Bank was the direct result of the Fed’s “continued and excessive rate hikes”. The bank publicly acknowledged its financial problems before making sure it had financial support to survive the crisis. However, the ensuing panic led to the withdrawal of billions of dollars from the bank.
