A new report finds that Silicon Valley Bank operated without a chief risk officer for nine months ahead of its catastrophic collapse—while the chief risk officer of its European branch worked to bring new LGBTQ initiatives to the bank. The sudden collapse of SVB is the second-largest failure in history of a U.S. financial institution. The shocking new report sheds some light on how the bank was allowed to go belly-up.
Silicon Valley Bank was forced to shut down on Friday by the California Department of Financial Protection and Innovation after it reported a $1.8 billion loss from a fire sale of its bond holdings. Shares of the bank’s parent company had plummeted 60% on Thursday and were down 60% on Friday before shutting their doors for good.
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A report by Daily Mail the following day revealed that SVB had no chief risk management officer as recently as two months before the bank’s abrupt end. After the bank’s former head of risk, Laura Izurieta resigned in April 2022; the position remained vacant for nine months. It was not filled until January 2023.
The new hire, Kim Olson, reportedly said at the time that she was excited to lead SVB’s risk management team “in this important next chapter of the firm’s trajectory.”
Maybe because the SVB Head of Risk Management was busy with more “pressing” things than banking? Just a guess👇🏼 pic.twitter.com/Vubn7BRBb8
— TennesseeTruthSeeker (@TennesseeMAGA13) March 11, 2023
Spent hours going through SVB's financial statements and changed my mind on the topic.
These guys weren't bad at risk management.
They were outright horrific.They literally gambled billions away.
You should not reward this level of moral hazard with a bailout.
— Alf (@MacroAlf) March 11, 2023
…they DID NOT hedge interest rate risk at all!
The duration of their huge portfolio before and after interest rate hedges was…the same?!
Effectively, there were NO hedges.
This means SVB was not applying basic risk management practices, and exposing its investors…
— Alf (@MacroAlf) March 11, 2023
Meanwhile, overseas, the bank’s risk management office in the U.K. was preoccupied with developing new LGBTQ initiatives and promoting diversity in the workplace. Jay Ersapah, SVB’s chief risk officer in Europe, had reportedly orchestrated a month-long Pride campaign in the office and implemented a new “safe space” program for staff, encouraging them to share their “coming out” stories. As chief risk officer, she also reportedly created a blog to bring awareness for LGBTQ youth mental health.
“The phrase ‘you can’t be what you can’t see’ resonates with me,’” Ersapah was reported saying on the bank’s website. “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’s LGBTQ activism as a risk management officer led to her being recognized in SVB’s “Outstanding LGBT+ Role Model List” in 2022.
“I feel privileged to help spread awareness of lived queer experiences, partner with charitable organizations, and above all create a sense of community for our LGBTQ+ employees and allies.”
Risk management
#SVB pic.twitter.com/Y9kEpIdN0J— Aaron Clarey (@aaron_clarey) March 11, 2023
On Saturday, Home Depot co-founder Bernie Marcus offered his thoughts on the SVB collapse in a Fox News interview.
“I feel bad for all of these people that lost all their money in this woke bank,” he said. “Who knows whether the Justice Department would go after them? They’re a woke company, so I guess not. And they’ll probably get away with it.”
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Silicon Valley Bank was the 16th largest bank in the United States at the time of its closure. The failure has had widespread repercussions, with several companies including Roku and Etsy, being left unable to pay their employees. The fallout is expected to leave long-term damage to the nation’s innovation sector.
“Instead of protecting the shareholders and their employees, they are more concerned about the social policies. And I think it’s probably a badly run bank,” Marcus said. “They’ve been there for a lot of years. It’s pathetic that so many people lost money that won’t get it back.”
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