The collapse of Silicon Valley Bank has sparked a frenzy among financial pundits worried about the state of the US economy. The Biden administration has announced measures for depositors to give them access to all their money, even as it says the American banking system is resilient and has solid foundations.
However, blame has erupted over what led to the collapse of the bank. The US tech sector has blamed Silicon Valley Bank chief executive officer Greg Becker. A bank employee told the story on condition of anonymity CNNwas “stunned” by the CEO’s public acknowledgment of the extent of the lender’s financial problems.
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The staffer who worked on the bank’s wealth management side said the move was “absolutely idiotic” as the transparency and “openness” led to the problems.
After SVB leadership announced it would raise $2.25 billion in capital and $21 billion in asset sales, the news caused tech startups to withdraw $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 urged Becker to fly to Kuwait and give the Middle Eastern country a third of control of the bank.
Jeff Sonnenfield, of the Yale School of Management’s Chief Executive Leadership Institute, said SVB’s leadership deserves criticism for “deaf, botched execution”.
The director of the institute, Steven Tian, told CNN that the announcement of a $2.25 billion capital increase was unnecessary as the bank has ample capital, well in excess of regulatory requirements, and the Loss of $1.8 billion does not need to be disclosed.
The duo even blamed Federal Reserve Chair Jerome Powell, claiming the collapse was directly a result of excessive and prolonged rate hikes by the Fed.
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