SVB collapse: Employees blame remote work, focus on social issues for bank collapse
Brady Knox
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Former employees at the deceased Silicon Valley Bank blame a combination of remote work, an over-focus on social issues, and a lack of risk management for the bank’s collapse.
Amid the collapse of the former financial institution, analysts are taking aim at the bank’s work culture, which was noted to be far less strict and competitive than its rivals, according to a Financial Times report. Employees gave a variety of answers as to what they believed was the primary issue with the bank’s culture, but the most common answer was the prevalence of remote work and its effect on productivity.
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“It is harder to have a challenging call over Zoom. It makes it harder to challenge management,” Nicholas Bloom, a professor at Stanford University, explained to the outlet. “Ideas like hedging interest rate risk often come up over lunch or in small meetings.”
Employees noted that the management was spread across the country: CEO Greg Becker often worked from Hawaii, President Michael Descheneaux worked from Florida, Chief Risk Officer Laura Izurieta worked from a Washington suburb, and general counsel Mike Zuckert worked from New York. Employees were similarly spread out.
“Some people worked from Miami, some moved to Las Vegas or a cabin in the woods and did the digital nomad thing,” a former banker told the outlet.
The other primary issue was the leadership’s overemphasis on cultivating an “empathetic” culture that failed to prioritize risk management.
“This is a West Coast bank that operates at the heart of innovation and is … empathetic and dependent on relationships,” a former executive said. “It is not cutthroat like Goldman Sachs.”
Corroborating the complaints of some prominent Republicans, several employees also bemoaned the focus on social justice at the
expense of other, more urgent subjects.
“I almost felt like I was at work on a college campus,” another former executive said, recalling the compulsory watching of weekly “TED talks” on social issues. Employees were also made to attend classes on “how to make sure you were not committing a microaggression.”
“It was not the abrasive, roll-up-your-sleeves culture of Wall Street. … Working at SVB felt more like working at a tech company than it did like working at a bank,” a former banker said.
“There was an overemphasis on things that weren’t important and not enough on things that are,” a senior executive added.
The issue of “overengineering” came up as well, with employees blaming the financing of expensive consultants on much of the bank’s troubles.
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“It felt like a lot of decision makers were relying on consultants in order to make decisions,” another former executive said. “It felt like a lot of overengineering to get to [answers] that people ought to have figured out on their own.”
SVB’s collapse was the biggest since the 2008 financial crisis and has sent shock waves through the global financial system.