Home/ News / World/  SVB collapse: Employees upset with CEO's "Idiotic" decisions, blame him for failure

The tech sector is currently engaging in a blame game to identify who is responsible for Silicon Valley Bank's collapse, as reported by CNN Business.

Many are pointing fingers at SVB CEO Greg Becker, accusing him of allowing the company to become the second-biggest US banking failure in history.

An anonymous Silicon Valley Bank employee expressed disbelief at Becker's decision to publicly disclose the extent of the bank's financial difficulties before securing the necessary financial support to weather the storm, highlighting a lack of strategic planning and decision-making.

As a result of the aforementioned events, customers were sent into a panic and scrambled to withdraw their funds.

“That was absolutely idiotic," the employee, who works on the asset management side of Silicon Valley Bank, said, as reported by CNN Business.

“They were being very transparent. It’s the exact opposite of what you’d normally see in a scandal. But their transparency and forthrightness did them in."

Last Wednesday night, Becker and his leadership team disclosed their plan to potentially raise $2.25 billion in capital and sell $21 billion in assets to offset the $1.8 billion loss.

This announcement triggered a wave of fear throughout Silicon Valley, where the bank plays a critical role as a lender to numerous tech startups. In response, many of these startups panicked and withdrew $42 billion on Thursday alone, causing Silicon Valley Bank's stock to plummet by 60%, as reported by California regulators.

Both Sonnenfeld and Tian expressed the opinion that the announcement of an unsubscribed $2.25 billion capital raise on Wednesday night was unnecessary. They argued that Silicon Valley Bank had more than enough capital that exceeded regulatory requirements, rendering the proposed capital raise redundant. Furthermore, they believe that there was no need to reveal the $1.8 billion loss simultaneously.

“I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again," Biden said in a statement.

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Updated: 14 Mar 2023, 03:50 PM IST
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