OPINION: This terrifying reason Silicon Valley Bank collapsed is a threat to thousands of other businesses
You can now listen to Fox News articles!are fairly obvious. The bank’s poor risk management strategy left it with insufficient cash to meet the needs of its largely tech sector customers base, which was particularly hard hit by rapidly rising interest rates. The important question at this point isn’t what happened, but why.
A customer stands outside a shuttered Silicon Valley Bank headquarters on March 10, 2023, in Santa Clara, California. Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Deposit Insurance Corporation. So, you don’t need a degree in economics to know that rising interest rates will decrease the value of a"hold to maturity" bond portfolio with a low average interest rate such as SVB’s. If you need to sell the bonds in such a portfolio quickly, you will lose a lot of money. Seems pretty basic.
"Woke capitalism," a classic oxymoron, dominated SVB’s corporate culture, including its dedication to DEI or"diversity, equity and inclusion." The bank had a website describing its commitment to DEI hiring. It ran DEI webinars and classes. Its 2022 ESG Report listed"Building a Culture of Diversity, Equity and Inclusion," as a strategic initiative .
One executive complained that it felt like they were"at work on a college campus," with"weekly internal ‘TED talks’ on social issues and classes on ‘how to make sure you were not committing a microaggression.’" Another commented that"there was an unseriousness to it," an"overemphasis on things that weren’t important and not enough on things that are."
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