SVB's CEO Greg Becker sold $3.6 million of his stock two weeks before the bank collapsed in March 2023, then flew to Hawaii. The bank held an $80 billion bond portfolio that lost value as interest rates rose, and faced $40 billion in withdrawal requests in a single day. Governance failures included operating without a chief risk officer for much of 2022.
2 weeks before Silicon Valley Bank collapsed, the CEO sold $3.6 million worth of stock that he had gotten as part of his compensation package. And then he recorded a farewell message for his employees. Thank you, and my heart is with you. But I so appreciate all the things you've done for me and for SVB. Then left the whole mess for his employees to clean up, boarded a first-class plane to Hawaii, and moved to his new vacation home out there. This man's name was Greg Becker. He'd spent years building Silicon Valley Bank into basically an institution in the tech community in the United States. $209 billion in assets. Over half of all tech startups in the United States would have their money on deposit with his bank. But they'd gotten that bid by being very aggressive. They had an $80 billion bond portfolio. And the problem with that bond portfolio was, as interest rates rose, it was becoming less and less valuable every day. At the same time, the money had run out for startups who had gotten big injections of cash during the cash-rich period of the COVID boom. Facing this perfect storm, basically, people had started to see the writing on the wall for Silicon Valley Bank. They were pulling their money out. On March 8th, 2023, 3, the bank facing this perfect storm needed to raise money and do it fast. And they announced that they were selling a big chunk of their bond portfolio at a loss. They needed to get $2.25 billion in order to keep operating. And remember all those tech startups and the venture capitalists backing them who'd been putting their money at Silicon Valley Bank? Well, suddenly they were out telling each other, "Quickly, the bank's going to be in trouble. You need to get your money out as soon as you can." By Thursday, over $40 billion had been requested as people asked for Silicon Valley to give their money back. The next day, it was expected another $100 billion would be requested. The problem was the bank didn't have it. That Thursday, Becker was calling major clients, asking them not to pull their money out. Their money was safe at Silicon Valley Bank. But by Friday, the regulators would step in and shut the bank down. Ironically, Greg, through this whole process, had lobbied Congress to remove restrictions to test the health of his bank. At the same time, he'd removed any sort of protection and insurance that the bank had had against interest rates rising. And made even worse under his leadership, the bank had had no chief risk officer throughout much of 2022. So the guy who had done all of this recorded a farewell message and hopped in a first-class seat and and headed out to his new vacation home in Hawaii. Silicon Valley Bank's collapse would be the second largest bank failure in United States history. And later on, Greg would be asked to testify in front of Congress about what happened and why. He blamed it on social media. The reality was the bank had set itself up to fail. If you'd like a deeper dive into what happened with Silicon Valley Bank, I recorded a long-form video about it in this very park. You can see the link on it below.
