By Harriet Alexander for Dailymail.com
05:41 14 Mar 2023, updated 07:23 14 Mar 2023
- Tim Mayopoulos, a veteran finance manager, was appointed CEO on Monday and said in a letter to clients that the lender was “running business as usual”.
- Silicon Valley Bank employees have reacted furiously to the “absolutely idiotic” actions of their former bosses in the days leading up to the bank’s collapse
- Greg Becker is accused of mishandling the situation and not trying hard enough to prop up his failing bank before being ousted as CEO
Silicon Valley Bank’s new CEO emailed customers to tell them it was ‘business as usual’ despite the ‘extremely challenging’ past few days – as staff questioned how their former bosses were ‘absolutely idiotic’ could make misjudgments.
Tim Mayopoulos was named new chief executive on Monday morning after the government sacked existing managers including boss Greg Becker.
“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 the past few days have been an extremely challenging time for our customers and our staff, and we are grateful for the support of the amazing community we serve.
‘As of today, I have joined the company as CEO.’
He said he came to the position with “humility,” “experience,” and “appreciation for the innovation economy.”
Mayopoulos is considered a safe couple by many in the industry, having experience in both troubled financial companies and the technology space.
He joined Fannie Mae after the 2008 financial crisis and rose to become President and CEO, returning the company to profitability and paying out more than $167 billion in dividends to taxpayers.
The banker left the company in 2018 and joined technology company Blend in January 2019, which provides cloud-based software that enables banks, credit unions, mortgage originators and other fintech companies to process billions of dollars in mortgage loans and consumer banking transactions per day.
He told SVB’s customers in his email: “We are trying to restore your confidence and support you and your businesses during this time.”
SVB’s website has now been refreshed and updated, stating: “Silicon Valley Bridge Bank, NA is a newly incorporated, FDIC operated full service ‘bridge bank’. The bank is open for business and new and existing depositors have unrestricted access to their money.’
The government hopes the hiring of Mayopoulos and his immediate, confident deployment will calm markets and calm nervous investors. It was agreed to be at warp speed.
Becker, who was removed as CEO by the government, is accused of not acting with the urgency needed to save the bank.
Yale School of Management Chief Executive Leadership Institute (CELI) CEO Jeff Sonnenfeld told CNN he was shocked by the “deaf, botched execution” of the bank’s efforts.
“Someone lit a match and the bank yelled, ‘Fire!’ — raising serious alarms out of serious concern for transparency and honesty,” said Sonnenfeld and Steven Tian, CELI’s director of research.
The pair told CNN Wednesday night’s announcement of a $2.25 billion unsubscribed capital raise was “unnecessary” as the Silicon Valley bank has ample capital well in excess of regulatory requirements.
Also, there was no need to disclose the $1.8 billion loss at the same time.
The awkward announcement “understandably sparked widespread hysteria amid a rush to withdraw deposits.”
Silicon Valley Bank staff were blunt in their assessment.
“That was absolutely idiotic,” said a staffer working on the wealth management side.
The employee told CNN management was deeply mistaken in announcing the problem without having the solution ready.
“They were very transparent. It’s the complete opposite of what you would normally see in a scandal. But their transparency and openness convinced them.”
The employee said there was anger that Becker had not been more proactive in finding funds to shore up the bank.
“People are just shocked at how stupid the CEO is,” a Silicon Valley Bank insider said.
“You’ve been in business for 40 years and you’re telling 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 clerk added that bosses are naive but not villains.
“The saddest thing is that this place is Boy Scouts,” he said. “They made mistakes, but these are not bad people.”
Federal authorities 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.
Funding for the bailout comes from a reserve set up after the 2008 banking crisis, paid for by levies on all banks.
Joe Biden said in a statement released Sunday night, “I am determined to hold those responsible for this mess fully accountable and to continue our efforts to strengthen oversight and regulation of larger banks so we don’t find ourselves in this position again.”
The bank’s demise began in late February with a rumor that Moody’s was planning a rating downgrade and the summoning of Goldman Sachs to stave off the damaging news.
On March 8, SVB announced a plan to prop up the bank – and prevent the downgrade – but the announcement spectacularly backfired, panicking investors who began withdrawing their funds from the bank.
On March 9, it was placed under federal control.
“It is with an incredibly heavy heart that I am here to deliver this message,” Becker said in a video message to employees on Friday.
“I can’t imagine what went through your head and what you thought about your job, your future.”