By Harriet Alexander for Dailymail.com
05:41 Mar 14, 2023, update 06:21 Mar 14, 2023
- Tim Mayopoulos, a veteran CFO, was named CEO on Monday and said in a letter to clients that the lender is ‘conducting business as usual’
- Silicon Valley Bank staff reacted furiously to the ‘absolutely idiotic’ actions of their former bosses in the days leading up to the bank’s collapse
- CEO Greg Becker is accused of mishandling the situation and not doing enough to support his ailing bank
Silicon Valley Bank’s new CEO emailed customers to say it was ‘business as usual’ despite the ‘extreme challenges’ of recent days – as employees wondered how their former bosses could make “absolutely silly” errors in judgment.
Tim Mayopoulos was named the new chief executive on Monday morning after the government sacked the existing leaders.
“Silicon Valley Bank, NA is open and conducting business as usual,” Mayopolous wrote, in an email sent to all customers Monday afternoon.
‘We are here at your service. I recognize that the past few days have been an extremely difficult time for our customers and employees, and we are grateful for the support of the incredible community we serve.
“I joined the company as CEO from today.”
He said he came to this position with “humility”, “experience” and “an appreciation for the economics of innovation”.
Mayopoulos is considered a pair of safe hands by many in the industry, as he has experience in both struggling financial companies and technology.
He joined Fannie Mae in the aftermath of the 2008 financial crisis and became chairman and CEO, returning the company to profitability and paying 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 consumer mortgages and banking transactions daily.
He told SVB customers in his email: “We are looking to restore your confidence and support you and your businesses at this time.”
SVB’s website has now been refreshed and updated, stating, “Silicon Valley Bridge Bank, NA is a newly formed, 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 Mayopoulos’ hiring and his immediate, confident outreach will calm markets and reassure jittery investors. It was agreed at lightning speed.
Federal agencies took over the bank on Friday and, after a deeply traumatic weekend, on Sunday evening the Federal Reserve announced that all deposits would be returned to customers in full.
The bailout funds will come from a reserve created in the aftermath of the 2008 banking crisis, paid for by levies on all banks.
Silicon Valley Bank staff ask how their bosses managed to manage the troubled financial institution so badly, and demand to know why they didn’t do more to save it.
Greg Becker, the former CEO, told staff on Friday 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 mind and you’re wondering, you know, about your job, about your future.”
But employees accuse Becker – who was stripped as CEO by the government – of not acting with enough urgency to save the bank.
Joe Biden said in a statement on Sunday evening: “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of big banks so that we are no longer in this position. “
The bank’s downfall began with a rumor in late February that Moody’s planned to downgrade its rating and the call in of Goldman Sachs to help stave off the damaging news.
On March 8, the bank announced a plan to consolidate the bank – and prevent the downgrade – but the announcement backfired dramatically and panicked investors, who began withdrawing their funds from the bank.
On March 9, it was placed under federal control.
Jeff Sonnenfeld, CEO of the Chief Executive Leadership Institute (CELI) at the Yale School of Management, told CNN he was shocked by the “dull and sloppy execution” of the bank’s struggles.
“Someone lit a match and the bank shouted, ‘Fire! – seriously sounding the alarm bells out of genuine concern for transparency and honesty,” said Sonnenfeld and Steven Tian, TFSA research director.
The pair told CNN that Wednesday night’s announcement of an unsubscribed $2.25 billion capital raise was “unnecessary” because Silicon Valley Bank had sufficient capital far beyond regulatory requirements.
Moreover, there was no need to simultaneously disclose the $1.8 billion loss.
The awkward announcement “understandably sparked widespread hysteria amid a deposit rush”. Staff were candid in their assessment.
“That was absolutely silly,” said one staff member, who works on the asset management side.
The employee told CNN that management had made a big mistake by announcing the problem without having the solution ready.
“They were very transparent. It’s the exact opposite of what you would normally see in a scandal. But their transparency and frankness betrayed them.
The staffer said there was anger that Becker had not been more proactive in raising funds to support the bank.
“People are just shocked at how stupid the CEO is,” the Silicon Valley Bank insider 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 one-third control of the bank.”
The employee added, however, that the bosses were naive, but not mean.
“The saddest thing is that this place is for scouts only,” he said. “They made mistakes, but they’re not bad people.”