Silicon Valley Bank--First woke, now broke!

[BPPLEE]

Right. Your post is about ESG, because the OP (incorrectly) pointed the finger at ESG.



I just told you.

Excuse me if I consider more than one source

 

[iluvatar5150]

Excuse me if I consider more than one source

The OP’s source didn’t blame it on ESG (that was merely the OP’s opining) and your article about ESG didn’t have anything to do with SVB.

 

[Aldebaran]

The OP’s source didn’t blame it on ESG (that was merely the OP’s opining) and your article about ESG didn’t have anything to do with SVB.

Their ESG efforts clearly did little to keep them afloat: SVB Releases 2022 Environmental, Social and Governance (ESG) Report

 

[BPPLEE]

The OP’s source didn’t blame it on ESG (that was merely the OP’s opining) and your article about ESG didn’t have anything to do with SVB.

That has nothing to do with the post you’re responding to. As I’ve already told you my post was about ESG

 

[iluvatar5150]

Their ESG efforts clearly did little to keep them afloat: SVB Releases 2022 Environmental, Social and Governance (ESG) Report

So? Their selection of office chairs clearly did little to keep them afloat. Shall we blame their interior decorators, too?

 

[Aldebaran]

So? Their selection of office chairs clearly did little to keep them afloat. Shall we blame their interior decorators, too?

The topic is about the wokeness and ESG of this bank, not their office chairs. Try to stay on topic.

 

[KCfromNC]

The topic is about the wokeness and ESG of this bank, not their office chairs. Try to stay on topic.

Using a different way to point out the confusion between correlation and causation in both the thread title and OP seems like the definition of on-topic.

Seems a lot of posts recently where anything which doesn't go along with the story being sold is falsely labeled as "off-topic". Wonder if that itself is an attempt to drag a thread off-topic, as diversion away from those posts which show such factual errors in the spin.

 

[Hans Blaster]

The topic is about the wokeness and ESG of this bank, not their office chairs. Try to stay on topic.

The "wokeness" of the bank was not related to its failure. Thread over.

 

[Aldebaran]

The "wokeness" of the bank was not related to its failure. Thread over.

How a business is run, whether it be a bank or any other business, affects whether or not it survives. If it is run in a woke way, it is likely to fail since a woke ideology does not hire people based on merits, but rather to meet quotas based on skin color and sexual preferences. Small wonder that this business in question has failed.

 

[Pommer]

While I'm critical of a lot of the "woke culture" that exists out there, I think trying to desperately tie this bank's failures to that is a stretch.

Especially considering that other banks have embraced some of those things and are doing fine.


The actual problems with this bank, from what I've inferred, were that they were too single threaded in their purpose (my understanding is they almost exclusively were in the ream of tech start-up loans and funding), and like many banks, only kept a percentage of deposits on hand (like many banks do...and invest the rest in the form of various investments and loans). A panic happened and there was a bank run.

That's why most banks try to diversify between a variety of investment and lending avenues and don't put all of their eggs in one basket, so that if one particular sector has a "not so stellar" quarterly earnings report (or companies have to start withdrawing their own cash to cover expenses if they're having a bad year), people don't rush out to withdraw their cash in a panic.

And they got hit with a bad review in a guy’s influential newsletter during a slow news cycle (no spy-balloons, or Presidents misplacing documents nor the laptop that never goes anywhere), and a “rough patch” because they held a lot of “new” businesses that largely relied on the venture capital industry to supply its (SVB) assets, these loans that also relied on that very same money and the illusion of any-money-going-to-be-made-in-this-situation wisped out of existence like a soap bubble in a briar.

 

[Pommer]

Their ESG efforts clearly did little to keep them afloat: SVB Releases 2022 Environmental, Social and Governance (ESG) Report

Corporate-citizens shouldn’t have to have values beyond making money in the manner a particular corporation makes it?

 

[Aussie Pete]

What makes you think the ESG initiatives had anything to do with the failure? All the discussion I've seen has focused on Silicon Valley investments (that SVB focused on) being high-risk (and since fewer people were now willing to invest in them, these companies drew on their bank balances to run their operations, helping to create a run on the bank), and inflation/rising interest rates making the low-interest rate government securities that banks rely on for stability becoming more of a a negative drag.

To fund the redemptions, Silicon Valley Bank sold on Wednesday a $21 billion bond portfolio consisting mostly of U.S. Treasuries. The portfolio was yielding it an average 1.79%, far below the current 10-year Treasury yield of around 3.9%. This forced SVB to recognize a $1.8 billion loss, which it needed to fill through a capital raise.

Nobody was eager to pump capital into a bank that was selling assets at a loss, while its customers were actively withdrawing all their own money.

ESG hinders businesses from employing the most suitable people and having the best policies for the business. It costs in time and money to slavishly follow the full range of woke ideology. Maybe people will start to see that leaving people alone to do their jobs is the best policy of all.

 

[iluvatar5150]

The topic is about the wokeness and ESG of this bank, not their office chairs. Try to stay on topic.

lol, seriously? If you really think it’s off-topic and not a rhetorical device intended to highlight the absurdity of your argument, report it and make your case to the rest of the staff.

How a business is run, whether it be a bank or any other business, affects whether or not it survives. If it is run in a woke way, it is likely to fail since a woke ideology does not hire people based on merits, but rather to meet quotas based on skin color and sexual preferences. Small wonder that this business in question has failed.

How “woke” was this business being run, exactly? Do you know? Can you tell us?

Here’s their diversity report:

https://www.svb.com/globalassets/library/uploadedfiles/diversity-equity-and-inclusion-at-svb_january-2023.pdf

According to the report, their US workforce is majority white, with asians coming in second, and their senior leadership and board is overwhelmingly white.

Their goal was to increase black and Hispanic representation among senior employees by a whopping 5-6%, respectively, by 2025.

Their executive team is all white and mostly men. Of the three women, two run HR and marketing, while the third handles risk, but only signed on late last year, after the bad investment decisions were already made.

Executive Team and Board of Directors | SVB

The Silicon Valley Bank Executive Team and Board of Directors. Read profiles now.

www.svb.com

So it was mostly a bunch of white guys running things.

They pushed out their last chief risk officer about a year ago and didn’t replace her for nine months:

Silicon Valley Bank Proxy Shows Board’s Secret Yearlong Risk Panic

Lax risk oversight fueled the collapse of the 16th largest U.S. bank. What did the board know and when did they know it?

www.forbes.com

 

[Aussie Pete]

Corporate-citizens shouldn’t have to have values beyond making money in the manner a particular corporation makes it?

As long as the company does not violate any laws, no. Companies are required by law to provide value for shareholders. Then the laws require them to waste time and money on all kinds of issues that are nothing to do with the running of the business. Executives make hay out of the ESG laws. Some companies award bonuses for meeting "diversity" targets. Employ a black lesbian transvestite and you could retire immediately on the bonus.

 

[iluvatar5150]

ESG hinders businesses from employing the most suitable people and having the best policies for the business. It costs in time and money to slavishly follow the full range of woke ideology. Maybe people will start to see that leaving people alone to do their jobs is the best policy of all.

Please explain for the class how being “woke” translates into a bunch of white guys investing too much in bonds and undercapitalizing their business?

 

[FireDragon76]

Please explain for the class how being “woke” translates into a bunch of white guys investing too much in bonds and undercapitalizing their business?

"Woke" has little to do with whether a company is successful, and more to do with their target demographics of their messaging (like Gillette wanting to sell more women's razors years ago).

 

[iluvatar5150]

"Woke" has little to do with whether a company is successful, and more to do with their target demographics of their messaging (like Gillette wanting to sell more women's razors years ago).

According to the complaints of the other posters, it also has to do with the hiring of folks who aren’t white men, like the ones who ran this company into the ground.

 

[FireDragon76]

According to the complaints of the other posters, it also has to do with the hiring of folks who aren’t white men, like the ones who ran this company into the ground.

90 percent of new businesses fail within a few years. I doubt that has much to do with the color of your skin, or your politics. New companies have to take risks in existing markets.

 

[Hans Blaster]

How a business is run, whether it be a bank or any other business, affects whether or not it survives. If it is run in a woke way, it is likely to fail since a woke ideology does not hire people based on merits, but rather to meet quotas based on skin color and sexual preferences. Small wonder that this business in question has failed.

And the part of their operations that was problematic was their mix of large deposits and their choice of investments. Your ideological blinders are covering your eyes.

 

[essentialsaltes]

Trump signs law rolling back post-financial crisis banking rules (May 24, 2018)​

By raising the asset threshold to $250 billion, the law is expected to reduce the number of banks subject to heightened regulatory scrutiny from 38 to 12.

While relatively unknown outside of Silicon Valley, SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to the FDIC.

CEO of SVB asking Congress to pass this law, raising that limit to $250 billion.

"These new burdens and the related compliance costs and necessary management time and other human resources are significant, and will require us to divert resources and attention from making loans to small and growing businesses that are the job creation engines of our country, even though our risk profile would not change."

"The liquidity coverage ratio, which penalizes banks..."

would have forced you to have more cash on hand with which you could have been able to pay out funds to the people making the withdrawals that ultimately sank your bank.

---

"SVB evidently required some of its Silicon Valley borrowers to do all their banking through the bank as a condition of their loans."

'Hey, let's have everyone put all their eggs in our basket.'

The value destruction taking place in the bank’s holdings of long-term securities was written in bright red on its ledger books. With the prospect of interest rate increases continuing through 2022 and into this year, its management had no excuse for failing to unwind its holdings well before now instead of waiting [and having to sell at a loss, precipitating the run].