Confessions of a Former SVB Executive

the famous line in Hemingway ’s The Sun Also Rises , “How did you go bankrupt? Two ways. Gradually and then suddenly.”

The executive said the “cake was already baked well before March 10, when it failed.” Indeed, in the 24 hours before SVB collapsed, Becker told his team the bank had lost $40 billion in deposits in four hours. That’s when a call was set up between Becker, the Fed, the F.D.I.C. and the state of California. “We’re not going to make it,” they were tol... See more

SVB went from $70 billion of deposits to $200 billion of deposits, thanks in large part to the pandemic. “If somebody had an I.P.O. one day, they had $100 million in checking, the next day they had $3 billion in checking,” the executive continued. “Or if somebody made a deal one day they’d have $500 million in checking and then they’d have $1 billi... See more

In effect, SVB didn’t have the technological infrastructure to handle the influx of deposits that came into it during the pandemic, nor the investment skill to manage all that new money. It took what appeared to be a safe route of investing in long-dated Treasuries but failed to recognize that in a rising interest rate environment they would lose v... See more