Silicon Valley Bank Employees Think Remote Work Contributed to Collapse

a remote worker in slippers
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In the aftermath of the collapse of Silicon Valley Bank (SVB), the 16th biggest bank in the country, many are left wondering what went wrong. Both current and former employees have stated that the bank’s support of remote work is a contributing factor.

Axios reports that current and former employees of Silicon Valley bank have mentioned the bank’s support of remote work as a contributing factor to its recent collapse. SVB stood out in the banking sector for its commitment to remote work. “If our time working remotely has taught us anything, it’s that we can trust our employees to be productive from wherever they work,” the company’s career website bragged. The SVB executive team was dispersed across the nation, with CEO Greg Becker occasionally working from Hawaii.

Security guards let individuals enter the Silicon Valley Bank's headquarters in Santa Clara, Calif., on Monday, March 13, 2023. The federal government intervened Sunday to secure funds for depositors to withdraw from Silicon Valley Bank after the banks collapse. Dozens of individuals waited in line outside the bank to withdraw funds. (AP Photo/ Benjamin Fanjoy)

Security guards let individuals enter the Silicon Valley Bank’s headquarters in Santa Clara, Calif., on Monday, March 13, 2023. (AP Photo/ Benjamin Fanjoy)

In its 2022 annual report, SVB included remote work as a risk to its business, despite its public commitment to it. The report cited concerns about productivity as well as IT problems brought on by having employees spread out across the nation as reasons for this risk.

The management of remote work determines whether it is successful or unsuccessful in any given organization. There are “well-managed organizations that operate remotely,” according to Kevin Delaney, CEO of Charter, a media and research company that consults with businesses on talent strategy. Some businesses, however, have given up on remote or hybrid work models because they were poorly run.

One such instance is Best Buy, a pioneer of hybrid work, which abandoned its hybrid policy because it no longer trained new hires on how to function in a flexible workplace. This caused problems with the company’s 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, tech-heavy clientele posed to the company’s balance sheet were not taken into account. Additionally, customer panic sparked by public communications about a necessary capital raise resulted in an unprecedented viral bank run.

Breitbart News economy editor John Carney wrote about the collapse of SVB:

From Bidenflation to Bank Crisis

There is a clear through line from the spendthrift Biden administration policies to the current crisis. The $1.9 trillion American Rescue Plan overstimulated the economy, pushing inflation up to the fastest pace in four decades. Excess savings flooded the banking system, pumping banks like Silicon Valley Bank (SVB) full of what we now see are flight-prone supersized deposits.

Nearly two weeks ago, we pointed out the paper by National Bureau of Economic research scholars that established how excess savings fueled inflation:

In their paper “The Trickling Up of Excess Savings,” economists Adrien Auclert, Matthew Rognlie, and Ludwig Straub argue that the stock of excess savings fueled inflation—and continues to fuel inflation. Everyone’s spending is someone else’s income. So, when households spend stimulus payments, the money does not leave the economy, it just gets transferred. So, stimulus checks get spent over and over again.

Eventually, the money stops circulating as quickly because it “trickles up” to wealthier households, who have a lower propensity to spend the additional income. But this trickling-up process takes quite a long time. The NBER economists estimate it takes five years for the funds to fully trickle up into the bank accounts of the wealthy.

The Fed accommodated the Biden administration’s reckless fiscal policy by holding interest rates near zero even after the economy had begun to recover from the pandemic and lockdowns. Massive quantitative easing held down bond yields not just for Treasuries but for mortgage-backed securities as well.

When the Fed belatedly woke up to the inflation problem, it raised interest rates at such a rapid rate that banks found themselves saddled with hundreds of billions on unrealized losses on bond portfolios. When Silicon Valley Bank found itself needing to sell bonds from its portfolio, those losses became all too real. That set off a panic among its customers, swiftly bringing about the demise of the bank.

Read more at Axios here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan


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