Silicon Valley Bank employees think remote work contributed to the collapse
In the aftermath of the collapse of Silicon Valley Bank (SVB), the country’s 16th largest bank, many are wondering what went wrong. Current and former employees said the bank’s support for remote working is a contributing factor.
Axios reports that current and former employees of the Silicon Valley bank have cited the bank’s support for remote working as a contributing factor to its recent collapse. SVB has stood out in the banking industry for its commitment to remote working. “If our time spent working remotely has taught us anything, it’s that we can trust our employees to be productive wherever they work,” boasted the company’s careers website. ‘business. SVB’s management team was scattered across the country, with CEO Greg Becker working occasionally from Hawaii.
Security guards let individuals into the headquarters of Silicon Valley Bank in Santa Clara, Calif., on Monday, March 13, 2023. (AP Photo/ Benjamin Fanjoy)
In its 2022 annual report, SVB included remote working as a risk to its business, despite its public commitment to it. The report cites concerns about productivity as well as IT issues caused by the distribution of employees across the country as reasons for this risk.
The management of remote work determines whether or not it succeeds in a given organization. There are “well-run organizations that operate remotely,” according to Kevin Delaney, CEO of Charter, a media and research company that consults with companies on talent strategy. Some companies, however, abandoned remote or hybrid work models because they were poorly managed.
One such example is Best Buy, a pioneer of hybrid working, which dropped its hybrid policy because it no longer trained new hires on how to operate in a flexible workplace. This caused issues with the company culture.
SVB’s failure was not directly attributed to remote work; rather, it was the result of other factors. The risks that a high interest rate environment and its concentrated, technology-driven customer base posed to the company’s balance sheet were not taken into account. Additionally, customer panic triggered by public communications about a needed capital raise has led to an unprecedented viral bank run.
Breitbart News’ economics editor John Carney wrote of SVB’s collapse:
From bid inflation to the banking crisis
There is a clear line between the Biden administration’s spendthrift policies and the current crisis. The $1.9 trillion US rescue plan overstimulated the economy, pushing inflation to its fastest pace in four decades. Excess savings flooded the banking system, pumping banks like Bank of Silicon Valley (SVB) full of what we now see as oversized deposits prone to theft.
Almost two weeks ago, we highlighted the National Bureau of Economics researchers’ paper that established how excess savings fuel inflation:
In their article “The trickle down of excess savings”, the economists Adrien Auclert, Matthew Rognlie and Ludwig Straub argue that the excess stock of savings has fueled inflation and continues to fuel inflation. Everyone’s expenses are someone else’s income. So when households spend stimulus payments, the money does not leave the economy, it is simply transferred. So stimulus checks are spent over and over again.
Eventually, the money stops flowing as quickly because it “trickles off” to better-off households, which have a lower propensity to spend the extra income. But this trickling process takes a long time. NBER economists estimate it takes five years for funds to be fully disbursed in the bank accounts of the rich.
…
The Fed has accommodated the reckless fiscal policy of the Biden administration keeping interest rates close to zero even after the economy began to recover from the pandemic and shutdowns. Massive quantitative easing kept bond yields low not only for Treasuries, but also for mortgage-backed securities.
When the Fed became belatedly aware of the inflation problem, it raised interest rates at such a rapid pace that banks found themselves saddled with hundreds of billions in unrealized losses on bond portfolios. When Silicon Valley Bank found itself forced to sell bonds from its portfolio, those losses became all too real. This sparked a panic among its customers, quickly leading to the bank’s demise.
Learn more about Axios here.
Lucas Nolan is a reporter for Breitbart News covering free speech and online censorship issues. Follow him on Twitter @LucasNolan
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