Last Wednesday night, Silicon Valley Bank CEO Greg Becker and his leadership team revealed that 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 when customers rushed to get their money from the bank. Tech startups were stunned by the news and withdrew $42 billion from SVB.
CNN spoke to an anonymous Silicon Valley Bank employee whom the news outlet described as “dumbfounded” by Becker’s handling of the news—notably, the CEO’s public acknowledgment of how bad things were, which played a role in causing 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 Friday video message.
“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, who said they believe that the $2.25 billion capital raise SVB implemented Wednesday was unnecessary and that the $1.8 billion loss announcement could have been spaced over a couple of 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 acknowledged its financial troubles publicly before ensuring it had financial support to survive the crisis. However, the subsequent panic that ensued led to the withdrawal of billions of dollars from the bank.