The Silicon Valley Bank collapse has triggered frenzy among financial experts who are concerned about the state of US economy. The Biden administration has announced measures for the depositors allowing them access to all of their money, even as it says that the American banking system is resilient and on solid foundation.
However, blame game has erupted over what led to the bank’s collapse. The US tech sector has blamed Silicon Valley Bank’s chief executive officer Greg Becker. A bank employee, on condition of anonymity, told CNN, ‘was dumbfounded’ by the CEO’s public acknowledgement of the extent of the lender’s financial troubles.
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The employee who worked on the asset management side of the bank said the move was ‘absolutely idiotic’ as the transparency and ‘forthrightness’ led to the woes.
After the SVB leadership announced to raise $2.25 billion in capital and $21 billion in asset sales, the news led to the tech startups pulling out $42 billion on Thursday alone. This left the bank with a negative cash balance of $985 million.
The bank employee said people were shocked to see how ‘stupid’ the CEO was. The insider even asked Becker to fly to Kuwait and give the Middle East country one-third control of the bank.
Jeff Sonnenfield from the Yale School of Management’s Chief Executive Leadership Institute, said the SVB’s leadership deserved criticism for the ‘tone-deaf, botched execution’.
The institute’s director Steven Tian told CNN that the announcement of $2.25 billion capital raise was unnecessary as the bank had sufficient capital far in excess of regulatory requirements and there was no need to reveal the loss worth $1.8 billion.
The duo even blamed the Federal Reserve chairperson Jerome Powell, claiming that the collapse was directly a result of excessive and persistent interest rate hikes by the Fed.
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