The rise and stunning fall of Silicon Valley Bank

[DGUtley]

The rise and stunning fall of Silicon Valley Bank


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Given how deeply and widely its roots run across the industry, Silicon Valley Bank — dramatically seized on Friday by the federal government amid a crippling bank run and a swooning stock — couldn't have a more apt name.

Why it matters: The stunning events of the last two days couldn't have unfolded as dramatically as it has without such a deep entrenchment. The venture capital industry is well known for its tight-knit network, and propensity to circulate information (and opinions) at the speed of tweets.

Flashback: Conceived by Bill Biggerstaff and Robert Medearis over a poker game, Silicon Valley Bank opened its first office in Santa Clara in 1983, providing banking and credit services to venture-backed startups.

• In 1986 it merged with National InterCity Bancorp, and went public on the Nasdaq in 1988, raising $6 million.
• By 1992, its real estate loans resulted in a $2.2 million loss after a California market downturn, leading the bank to diversifying its portfolio (by 1995, real estate was less than 10% of its loans, compared with nearly 50% previously).
• It provided early banking services to Valley stalwarts like Cisco Systems and Bay Networks.

The big picture: SVB is not just a bank for startups — it has several divisions and business lines, all intertwined with the startup world.


By the numbers: According to SVB's data, it banked 44% of 2022’s venture-backed tech and health care IPOs, and 55% in 2021.




https://www.axios.com/2023/03/11/sil...=pocket-newtab

[carolina73]

The losers in this game are the poor startups that have lost access to the money they raised.

The Winners will probably be the wealthy investors the the CA Democrats will lobby Biden for a bailout and get it, in return for promises of campaign funds.

[Peter1469]

Guess what- the bank was big into ESG.

Speaking of ‘splaining, SVB officials will need to answer a lot of questions, including, What role did wokeness play in SVB’s failure?


Another term for wokeness, of course, is ESG, which stands for environmental, social, and governance.ESG is a pertinent question, as there’s a considerable body of economic literature showing that woke investments aren’t good investments. For instance, one study by professors at the London School of Economics and Columbia University finds that:

ESG funds appear to underperform financially relative to other funds within the same asset manager and year, and to charge higher fees. Our findings suggest that socially responsible funds do not appear to follow through on proclamations of concerns for stakeholders.

Shorter version: ESG makes less, costs more, and is a fraud.


Of course, if ESG investing only soothed the conscience of gullible trust-funders, it might be okay.But now, as a big ESG bank goes belly up, we see the danger of systemic risk to the whole economy. That’s what happened when bank failures domino-ed back in 1929.

[Peter1469]

Good news if they stick to their guns:

Yellen: No federal bailout for collapsed Silicon Valley Bank

[DGUtley]

This is what FJB wants to do to our 401K's by redefining fiduciary.

[Peter1469]

This is what FJB wants to do to our 401K's by redefining fiduciary.

There is pushback on that redefinition. Also if the SEC does it I expect WV v EPA will control- once it gets through the courts.

[DGUtley]

There is pushback on that redefinition. Also if the SEC does it I expect WV v EPA will control- once it gets through the courts.

I would hope so. The audacity of it all.

[carolina73]

Good news if they stick to their guns:

Yellen: No federal bailout for collapsed Silicon Valley Bank

Never trust the words coming from a Democrat.

[RMNIXON]

Good news if they stick to their guns:

Yellen: No federal bailout for collapsed Silicon Valley Bank

They are afraid it will start the ball rolling for even more bailouts in the near future we can't afford. Plus the political aspect as the progressive left still hate banks as Capitalist institutions.

[carolina73]

Yellen already hinted at programs for the depositors "so they could make payrolls".
So a hands off policy already has a crack in it.