How Wokeness and Negligence Sank Silicon Valley Bank Amid Global Perfect Storm

© AP Photo / Jeff ChiuA property managment representative gestures while asking reporters to clear the entrance area to Silicon Valley Bank in Santa Clara, Calif.
A property managment representative gestures while asking reporters to clear the entrance area to Silicon Valley Bank in Santa Clara, Calif. - Sputnik International, 1920, 13.03.2023
Silicon Valley Bank (SVB), the financial institution specializing in banking for tech startups since 1983, collapsed on Friday morning and was taken over by federal regulators. How has SVB sleepwalked into the financial trap?
The SVB was one of the top 20 US commercial banks – boasting $209 billion in total assets at the end of 2022 – until last Wednesday, when it announced that it had sold a package of securities at a loss, adding that it had to sell $2.25 billion in new shares to keep afloat.
The announcement caused a wave of panicked withdrawals being fanned by venture capitalists. Customers withdrew a whopping $42 billion in deposits by the end of Thursday. The bank’s stock went down, hurting other bank shares and prompting fears of a domino effect.
The SVB collapsed the next day, making it the second largest bank failure since the 2008 financial crisis. The California Department of Financial Protection and Innovation stepped in on Friday and appointed the Federal Deposit Insurance Corporation (FDIC) to take over the embattled bank.
Commenting on the SVB collapse, experts referred to a number of external factors. They largely blamed the Federal Reserve which has been aggressively raising interest rates to curb inflation. As a result, growing borrowing costs weakened tech stocks that had benefited the SVB. In addition, interest rate hikes eroded the value of long-term bonds that the SVB relied upon.
Finally, venture capital started drying up, forcing startups to withdraw funds held by the SVB. The bank simply could not handle the combination of losses in bonds and the high pace of customer withdrawals, according to the US press.
However, the Federal Reserves' rate hikes policy was adopted in March 2022 and obviously did not come as a bolt from the blue for the SVB. Clouds have been gathering on the bank's horizon for quite a while, prompting the question as to what the financial institution's risk management had been busy with all that time.
A pedestrian speaks on a mobile telephone as he walks past Silicon Valley Bank’s headquarters in Santa Clara, California on March 10, 2023. - Sputnik International, 1920, 13.03.2023
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Go Woke, Go Broke?

While the world economy has been experiencing a perfect storm, the California-based bank's leadership appeared to be focused on something more important than financial security, i.e. promoting a "culture of inclusion" and creating "equity in hiring, performance management, benefits, supplier diversity, donations and volunteering."
To keep everyone ensured that the equity process is going on, the bank reported its "workforce diversity metrics" to its employees and board, and annually published the data on its website.
To complicate matters further, the US conservative press has revealed that the SVB operated without a chief risk officer (CRO) between April 2022 and January 2023. Laura Izurieta, the bank's former head of risk, left the bank in April 2022. Somehow her position remained unfilled for nine months until when Kim Olson, formerly of Japanese bank Sumitomo Mitsui, took the reins of the risk office in January.
Federal Reserve Board Chair Janet Yellen testifies on Capitol Hill in Washington, Tuesday, Feb. 24, 2015 - Sputnik International, 1920, 12.03.2023
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Meanwhile, on the other side of the pond, Jay Ersapah, the UK-based head of financial risk management for SVB in Europe, Africa and the Middle East, seemed distracted by her own agenda, pushing ahead with a vast variety of LGBTQ initiatives including a month-long pride campaign and a new blog raising mental health awareness for queer youth. She also served as director for Diversity Role Models and volunteered as a mentor for migrant leaders.
"As a queer person of color and a first-generation immigrant from a working-class background, there were not many role models for me to ‘see’ growing up," Ersapah was cited as saying on the company website.
Ersapah's bio on the Outstanding website reads: "Jay is a leading figure for the bank’s awareness activities including being a panelist at the SVB’s Global Pride townhall to share her experiences as a lesbian of color, moderating SVB’s EMEA Pride townhall and was instrumental in initiating the organization's first-ever global 'safe space catch-up', supporting employees in sharing their experiences of coming out."
This illustration picture shows the Silicon Valley Bank (SVB) logo displayed on a smartphone in Arlington, Virginia, on March 10, 2023 - Sputnik International, 1920, 13.03.2023
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Nine months ago, SVB released a corporate video featuring Ersapah who said that she "could not be prouder" to work for the bank serving "underrepresented entrepreneurs." All this at the time that no CRO was present at the California office and Ersapah, theoretically, should have been watching closely how the Fed's aggressive hikes were eating away at long-term bonds the bank relied on and sucking the life from the world's major currencies.
Florida Governor Ron DeSantis, who is rumored by the US press to kick off an unofficial presidential campaign, blamed the SVB collapse on the controversial "woke" culture. "This bank, they’re so concerned with DEI [diversity, equity, and inclusion] and politics and all kinds of stuff. I think that really diverted from them focusing on their core mission," DeSantis told a US broadcaster.
“I also look at it and say we have such a morass of federal regulations. We have a massive federal bureaucracy and yet they never seem to be able to be there when we, we need them to be able to prevent something like this,” the Florida governor added in a clear reference to the Biden administration that has been pushing ahead with "woke" policies since Joe's day one in the Oval Office.
A food delivery worker enters Silicon Valley Bank in Santa Clara, Calif., Friday, March 10, 2023.  - Sputnik International, 1920, 13.03.2023
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Gentile's Titanic Hit an Iceberg, Again

Meanwhile, another SVB executive, Joseph Gentile, has also come into the spotlight after the bank's collapse. Before joining SVB as the chief administrative officer (CAO) in 2007, Gentile worked in the same position at Lehman Brothers’ Global Investment Bank before its infamous collapse in 2008. At that time, Lehman Brothers was one of the biggest banks that was forced to declare bankruptcy during the financial crisis.
Prior to going bankrupt in 2008, Lehman was the fourth-largest US investment bank, with $639 billion in assets and $619 billion in debt, according to the US media.
Gentile's connection to Lehman Brothers has sparked a lively debate among US netizens with some jokingly saying that one "can't make this up" and that SVB's collapse is "starting to make sense now."
Some US pundits are arguing that SVB's collapse had nothing to do with Ersapah's "wokeness" or Gentile's record of being Lehman Brothers’ CAO. According to them, it was just bad timing, bad communication, and massive withdrawals in the first place. Probably, but what appears to be indisputable is that one of the bank's executives was absorbed by something else rather than the institution's security, while the other one seemed to completely overlook the fact that the SVB was left with no risk manager at the helm amid the global financial storm.
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