Silicon Valley Bank Names New CEO As Employees Target Previous Bank Chief
By Harriet Alexander for Dailymail.com
05:41 14 March 2023, updated 06:21 14 March 2023
- Tim Mayopoulos, an experienced finance executive, was named chief executive on Monday and said in a letter to clients that the lender was “conducting business as usual”
- Employees at Silicon Valley Bank have reacted furiously to their former boss’s “absolutely idiotic” actions in the days before the bank’s collapse
- CEO Greg Becker is accused of mishandling the situation and not trying hard enough to prop up his sinking bank
Silicon Valley Bank’s new chief executive emailed clients to tell them it’s “business as usual” despite the “extremely challenging” past few days – as employees were left asking how their former bosses could do such “absolutely idiotic” errors of judgment.
Tim Mayopoulos was appointed as the new chief executive on Monday morning, after the government sacked the existing managers.
“Silicon Valley Bank, NA is open and conducting business as usual,” Mayopolous wrote, in an email to all customers sent Monday afternoon.
“We are here to serve you. I realize that the past few days have been an extremely challenging time for our customers and our employees, and we are grateful for the support of the wonderful community we serve.
“I have joined the company as CEO effective today.”
He said he came to the role with ‘humility’, ‘experience’ and ‘an appreciation for the innovation economy.’
Mayopoulos is seen as a safe pair of hands by many in the industry, as he has experience both from troubled financial firms and in technology.
He joined Fannie Mae in the wake 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 of mortgage and consumer banking transactions per day.
He told SVB’s customers in his email: “We are looking to restore trust and support you and your businesses at this time.”
SVB’s website has now been refreshed and updated, declaring: ‘Silicon Valley Bridge Bank, NA is a newly formed, full-service FDIC-operated ‘bridge bank’. The bank is open for business and new and existing depositors have full access to their money.’
Mayopoulos’s appointment, and his immediate, safe return, the government hopes will calm markets and reassure jittery investors. It was agreed upon at warp speed.
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 returned in full to customers.
The funds for the rescue will come from a reserve created in the wake of the banking crisis in 2008, paid for by fees on all the banks.
Employees at Silicon Valley Bank are asking how their bosses managed to mistreat the financial institution so badly, and are demanding to know why they didn’t do more to save it.
Greg Becker, former CEO, broke the news to employees on Friday that the bank is 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 wondering about your job, your future.”
But employees accuse Becker – who has been removed as chief executive by the government – of not acting with enough urgency to save the bank.
Joe Biden said in a statement issued Sunday night: “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen supervision and regulation of major banks so that we are not in this position again. “
The bank’s downfall began with a rumor in late February that Moody’s planned to downgrade its rating, and the calling in of Goldman Sachs to help fend off the damaging news.
On March 8, the bank announced a plan to strengthen the bank – and prevent the downgrade – but the announcement backfired spectacularly and panicked investors, who began pulling their money out of the bank.
On March 9, it was taken under federal control.
Jeff Sonnenfeld, executive director of the Yale School of Management’s Chief Executive Leadership Institute (CELI), told CNN he was shocked by the “tone-deaf, flawed execution” of the bank’s struggles.
“Someone lit a match and the bank yelled, ‘Fire!’ — to seriously raise the alarm out of genuine concern for transparency and honesty, said Sonnenfeld and Steven Tian, CELI’s director of research.
The pair told CNN that the announcement of an unsubscribed $2.25 billion capital raising Wednesday night was “unnecessary” because Silicon Valley Bank had sufficient capital well beyond regulatory requirements.
Furthermore, it was not necessary to disclose the $1.8 billion loss at the same time.
The clumsy announcement “understandably sparked widespread hysteria amid a rush to withdraw deposits.” The staff were blunt in their assessment.
“It was absolutely idiotic,” said one employee, who works on the asset management side.
The employee told CNN that management made a deep mistake in announcing the problem without having the solution ready.
“They were very transparent. It’s the exact opposite of what you’d normally see in a scandal. But their openness and openness did them in.’
The employee said there was anger that Becker had not been more proactive in finding funds to support the bank.
“People are just shocked at how stupid the CEO is,” the Silicon Valley Bank insider said.
“You’ve worked for 40 years and you tell 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.”
However, the employee added that the bosses were naive but not crooks.
“The saddest thing is that this place is Boy Scouts,” he said. “They made mistakes, but these are not bad people.”