{p}A person from Silicon Valley Bank, center rear, speaks to people waiting outside an entrance to Silicon Valley Bank in Santa Clara, California on Friday, March 10, 2023. The Federal Deposit Insurance Corporation seized Bank Bank’s assets on Friday, marking the biggest bank failure since Washington Mutual at the height of the 2008 financial crisis. (Photo by AP/Jeff Chiu){/p}
WASHINGTON (TND) —
Leading Senate Democrats are calling the collapse of Silicon Valley Bank a “colossal failure” as the federal government launches a criminal investigation into the bank’s executives. The Justice Department and the Securities and Exchange Commission are already working to investigate the collapse.
Leading Senate Democrats are calling the collapse of Silicon Valley Bank a “colossal failure” as the federal government launches a criminal investigation into the bank’s executives. The Justice Department and the Securities and Exchange Commission are already working to investigate the collapse. (TND){{ }}{{ }}
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“They’re really concerned when there’s securities fraud going on, like making misleading statements,” said Connel Fullenkamp, an economist at Duke University.
The DOJ is investigating possible insider trading, while the SEC is reviewing a series of stock sales by top executives in the days leading up to the collapse. However, the timing of the trades makes them difficult to analyze as the rules for certain trades changed at the end of February.
As the two government agencies investigate the failed bank along these avenues, a multitude of questions remain unanswered for both lawmakers and concerned citizens.
What were the circumstances surrounding these approximately $3 million worth of stock sales and were these sales covered by the regulations at the time? Why has the bank managed interest rate risk so poorly, and how did regulators miss red flags that many say could have been easily caught?
Have bank leaders deliberately made misleading, overly optimistic statements to the public? If this is the case, these actions could be considered cheating.
Far-right critics, such as Home Depot co-founder Bernie Marcus, argue that leadership overlooked issues because they diverted attention to other issues, claiming that the failure is somehow related to their efforts to support minorities within the company.
“They were too busy being woke up and playing the wake up game,” Marcus said.
A sign of a branch of Silicon Valley Bank is pictured in an office building of the bank in Frankfurt, Germany, Monday, March 13, 2023. (AP Photo/Michael Probst)
Data from conservative think tank Claremont Institute shows Silicon Valley Bank has donated $73 million to Black Lives Matter and related causes.
According to the database, the “BLM movement” includes “BLM parent organizations (BLMGNF and M4BL), the BLM Foundation (a separate, BLM-oriented organization that some contributors confused with BLMGNF), BLM grassroots, independent BLM chapters (the BLM10+ , etc.), BLM PAC, the fiscal sponsors of BLM organizations (including AfGJ, Thousand Currents, the Common Counsel Foundation, and the Tides Center), BLM At School, BLM partners such as the NAACP (a partner of BLMGNF), and the ACLU (a partner of BLM DC) and M4BL’s 150+ affiliates.” They say related causes are “organizations and initiatives that advance one or more aspects of the BLM agenda.”
A New York Post report also indicates that some members of the SVB board have political ties to leading Democrats such as Nancy Pelosi and Hillary Clinton, but there is no evidence that the bank’s policies contributed to its collapse. Additionally, its leader’s political views align with many of the Silicon Valley companies it served as customers.
Experts argue that the niche customer base — many connected through social media — likely hastened the decline.
“All these people kind of knew each other. I think it really underscores social media’s ability to turn the tables on companies very quickly,” Fullenkamp said.
Investigators are working to get to the bottom of this failure in hopes of preventing panic from spreading across the banking industry.
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