For Immediate Release
Monday, March 13, 2023
Patriotic Millionaires: Silicon Valley Bank’s Incompetence is a Policy Failure Impacting Regular Americans
“SVB’s negligent investment strategies put tens of billions of dollars of risk on the shoulders of businesses and workers.”
Washington, DC – Last Friday, the Silicon Valley Bank (SVB), known for dealing with some of Silicon Valley’s biggest venture capitalists and startups, collapsed. This is the first bank failure of its size since the financial crisis over a decade ago, and the resulting chaos had left many businesses unable to access funds to pay their workers. In response, the FDIC formed the Deposit Insurance National Bank of Santa Clara in an effort to ensure Americans who relied on the bank get paid. This is not a bailout of the bank (executives and shareholders are getting nothing) but a safeguard to guarantee that hard-working Americans receive the paychecks that they have already earned.
In response, Morris Pearl, Chair of the Patriotic Millionaires and a former managing director at BlackRock, Inc., released the following statement:
“SVB’s negligent investment strategies put tens of billions of dollars of risk on the shoulders of businesses and workers. They utterly failed to foresee the consequences of the current market and the Federal Reserve interest rate hikes. Any competent bank manager old enough to remember Paul Volcker should have seen this crisis coming a mile away.
SVB’s incompetence in running their financial institution has led to a crisis impacting regular Americans. They failed to do their due diligence, even by keeping a Risk Management Officer employed. This should be the bare minimum required of our financial institutions.
Bankers always say that regulators get in the way of doing their jobs and making profits, but this is what happens when Congress takes them at their word and loosens regulations. Bank managers have an inherent conflict of interest regarding government oversight; they get the credit if things go well, and the FDIC takes the hit if things go south.
Republicans and some Democrats played a hand in bringing about this crisis – they passed legislation that removed government oversight of this, now obvious, systemically important bank.”
Morris Pearl was a managing director on the BlackRock team that the Federal Reserve, Treasury, and FDIC hired to structure and assess the cost of the Citibank bailout in 2008 before working on similar projects in the UK, Greece, and the Republic of Ireland.