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 $1.8 billion loss. The announcement set the stage for a bank run that followed as customers rushed to get their money out of the bank. Tech startups were shocked by the news and withdrew $42 billion from SVB.
CNN has spoken to an anonymous Silicon Valley Bank employee described by the news outlet as “flabbergasted” by Becker’s handling of the news—notably, the CEO’s public acknowledgment of how bad things were, which played a role in causing the 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 on Friday.
“They were being very transparent,” the unnamed source reportedly said, which is “the exact opposite of what you’d normally see in a scandal. But their transparency and forthrightness did them in.”
CNN quoted Jeff Sonnenfeld, Yale School of Management CEO, and Steven Tian, ​​the school’s research director, as saying they believe the $2.25 billion capital increase SVB implemented Wednesday is unnecessary and that the $1.8 billion loss announcement could be issued within weeks.
According to Sonnenfeld and Tian, ​​the collapse of Silicon Valley Bank directly resulted from “the Fed’s persistent and excessive interest rate hikes.” The bank publicly acknowledged its financial problems before ensuring it had the financial backing to survive the crisis. However, the subsequent panic that ensued led to the withdrawal of billions of dollars from the bank.