Silicon Valley Bank’s new CEO has emailed clients to tell them business as usual despite “extremely challenging” past few days, as bank employees wonder how their former bosses can make errors in judgment so “absolutely idiots”.
Tim Mayopoulos was named the new CEO on Monday morning, after the government fired existing managers.
“Silicon Valley Bank, NA is open and operating as usual,” Mayopolous wrote, in an email to all customers sent Monday afternoon.
‘We are here to serve you. I recognize that the past few days have been an extremely challenging time for our customers and employees, and we are grateful for the support of the incredible community we serve.
‘I have joined the company as CEO as of today.’
Tim Mayopoulos (left) was named Silicon Valley Bank’s new chief executive on Monday after his predecessor Greg Becker (right) oversaw its collapse and was ousted on Friday.
He said he came to the job with “humility,” “experience” and “an appreciation for the economy of innovation.”
Mayopoulos is seen as a safe pair of hands, with experience in both crisis-hit financial firms and technology.
He joined Fannie Mae in the aftermath of the 2008 financial crisis and rose to become president and CEO, returning the company to profitability and delivering more than $167 billion in dividends to taxpayers.
He left in 2018 and in January 2019 joined technology company Blend, which provides cloud-based software to enable banks, credit unions, mortgage originators and other fintech companies to process billions of dollars in mortgage loans and consumer banking transactions per day.
He told SVB customers in his email: “We seek to restore your trust and support you and your companies at this time.”
The SVB website has now been revamped and updated, stating: ‘Silicon Valley Bridge Bank, NA is a newly created, FDIC-operated, full-service ‘bridge bank’. The bank is open for business and new and existing depositors have full access to their money.’
The government hopes the hiring of Mayopoulos and his immediate, confident outreach will calm markets and reassure nervous investors.
It was agreed at full speed.
The SVB website is now up and running again, with a note at the top saying “business as usual”.
People walk through the parking lot at the Silicon Valley Bank headquarters in Santa Clara on Friday after financial regulators closed the bank.
Silicon Valley Bank New York office is empty in New York on Friday
A worker (center) tells people that Silicon Valley Bank headquarters is closed Friday after regulators shut down the bank and the FDIC seized its assets.
Federal agencies took over the bank on Friday, and after a deeply traumatic weekend, the Federal Reserve announced Sunday night that all deposits would be fully refunded to customers.
Funds for the bailout will come from a reserve created after the 2008 banking crisis, paid with levies on all banks.
Silicon Valley Bank staff ask how their bosses managed to run the tottering financial institution so poorly, and demand to know why they didn’t do more to save it.
Greg Becker, the former chief executive, on Friday broke the news to staff that the bank was closing.
“It is with an incredibly heavy heart that I am here to deliver this message,” he said in a video message.
“I can’t imagine what was going through your head and asking you, you know, about your job, your future.”
But employees accuse Becker, who has been ousted as chief executive by the government, of not acting with enough urgency to save the bank.
Silicon Valley Bank CEO Greg Becker speaks at a conference in 2018. The bank’s collapse is the second largest bank failure in US history.
President Joe Biden is pictured with Treasury Secretary Janet Yellen. The federal government moved quickly to prevent contagion from the collapse of SVB
Joe Biden said in a statement issued on Sunday night: “I am strongly committed to holding fully accountable those responsible for this disaster and to continue our efforts to strengthen supervision and regulation of the largest banks so that we are never in trouble again.” this position”.
The bank’s downfall began with a rumor in late February that Moody’s planned to downgrade its rating and recall Goldman Sachs to help stave off the damaging news.
On March 8, the bank announced a plan to shore up the bank and avoid the downgrade, but the announcement backfired spectacularly and caused investors to panic, who began withdrawing their funds from the bank.
On March 9 it passed into federal control.
Jeff Sonnenfeld, executive director of the Yale School of Management’s Executive Leadership Institute (CELI), said CNN he was shocked by the “deaf, failed execution” of the bank’s struggles.
‘Someone struck a match and the bank yelled: ‘Fire!’ – sounding alarm bells in earnest out of a genuine concern for transparency and honesty,” said Sonnenfeld and Steven Tian, CELI research director.
The couple told CNN that the announcement of a $2.25 billion unsubscribed capital increase Wednesday night was “unnecessary” because Silicon Valley Bank had enough capital well in excess of regulatory requirements.
Furthermore, there was no need to simultaneously disclose the $1.8 billion loss.
The awkward announcement “understandably sparked widespread hysteria amid a rush to withdraw deposits.”
The staff were blunt in their assessment.
A pedestrian walks past a private Silicon Valley Bank branch in San Francisco on Monday.
“That was absolutely idiotic,” said one staffer, who works on the asset management side.
The clerk told him CNN management erred sorely by announcing the problem without having the solution ready.
‘They were being very transparent. It’s the exact opposite of what you would normally see in a scandal. But his transparency and frankness got them in.’
The staffer said he was angry that Becker had not been more proactive in finding funds to prop up the bank.
“People are shocked at how stupid the CEO is,” the Silicon Valley Bank source said.
‘You’ve been in business for 40 years and you’re telling me you can’t raise $2 billion privately?
Get on a jet and fly to Kuwait like everyone else and give them control of a third of the bank.
The employee added, however, that the bosses were naive, but not villains.
“The saddest thing is that this place is Boy Scouts,” he said. “They made mistakes, but they are not bad people.”