By Stefan J. Bos, Chief International Correspondent Worthy News
WASHINGTON/JERUSALEM/LONDON (Worthy News) – World leaders are anxiously monitoring the global ramifications of Friday’s sudden collapse of startup lender Silicon Valley Bank Financial Group (SVB), the largest bank to fail since the 2008 financial crisis.
Israel’s Prime Minister Benjamin Netanyahu said he was “closely following the collapse of the American investment bank SVB, which is creating a deep crisis in the hi-tech world.”
He added: “I held talks from Rome with hi-tech officials in Israel, and upon my return to Israel, I will discuss the extent of the crisis with the ministers of finance and economy and the governor of the Bank of Israel.”
Netanyahu stressed that “if necessary, out of responsibility for the companies and employees of hi-tech in Israel, we will take steps that will help Israeli companies, whose operations are centered in Israel.”
The measures were needed, he said, “to overcome the cash flow crisis that has arisen for them due to the upheaval. Israel’s economy is strong and stable, and this is again reflected in this crisis as well.”
In Britain, another center for global capital, Jeremy Hunt, the finance minister, came under pressure to intervene after leaders of roughly 180 tech companies sent him a letter.
“The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years,” they said in the letter. “Many businesses will be sent into involuntary liquidation overnight.”
Hunt reportedly spoke with the governor of the Bank of England about the situation on Saturday morning and was involved in talks with affected firms. Britain’s government wants to know how much these startups still have in cash, according to officials familiar with the negotiations.
However, this was just the beginning, as SVB had branches in Israel, China, Denmark, Germany, India, and Sweden, too.
With the world watching, U.S. President Joe Biden’s administration tried to calm investors ahead of Monday’s opening bells of stock markets worldwide.
U.S. officials argued that safeguards enacted after the 2008 financial crisis would protect the American economy despite SVB’s collapse.
Treasury Secretary Janet Yellen expressed “full confidence” while meriting met with banking regulators on Friday to discuss the sudden developments, the Treasury Department said.
It came amid a warning that the bank’s failure could wipe out startups worldwide without government intervention impacting generations of high-tech innovators.
SVB’s joint venture in China, SPD Silicon Valley Bank Co., sought to calm local clients over the weekend by reminding them that operations have been “independent and stable.”
Based in the U.S. state of California’s Santa Clara city, the SVB was ranked as the 16th biggest bank in the United States late last year, with some $209 billion in assets.
Financial experts said, however, that the U.S. central bank system, the Federal Reserve, aggressively raised interest rate hikes, complicating SVB’s lending operations.
As it tried to raise capital to offset fleeing deposits, the bank reportedly lost $1.8 billion on Treasury bonds whose values were torpedoed by the rate hikes.
However, commentators have said the bank’s collapse was also due to a “woke culture” within the SVB leadership.
“A head of risk management at Silicon Valley Bank spent considerable time spearheading multiple “woke” LGBTQ+ programs, including a “safe space” for coming out stories, as the firm catapulted toward collapse,” noted the New York Post newspaper.
“Jay Ersapah, the boss of Financial Risk Management at SVB’s UK branch, launched initiatives such as the company’s first month-long Pride campaign and a new blog emphasizing mental health awareness for LGBTQ+ youth,” the Post explained.
She said she felt “privileged” to spearhead these initiatives “and 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.”
“The phrase ‘you can’t be what you can’t see’ resonates with me,’” Ersapah was quoted as saying on the company 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.”
Her efforts earned her a spot on SVB’s “outstanding LGBT+ Role Model Lists 2022,” a list shared in a company post just four months before U.S. authorities shut the bank down. Ersapah couldn’t immediately be reached for comment.
On Saturday, Home Depot company co-founder Bernie Marcus claimed that “woke” policies like the ones launched by Ersapah could have led to the SVB’s dramatic failure. “I feel bad for all of these people that lost all their money in this woke bank. You know, it was more distressing to hear that the bank officials sold off their stock before this happened. It’s depressing to me,” he added.
Back in California SVB, startup founders stood outside of the bank’s branch on Silicon Valley’s famed Sand Hill Road in the cold and rain on Friday. They were knocking on the locked glass doors and trying to get representatives of the Federal Deposit Insurance Corporation (FDIC) to answer their questions.
A drones startup founder there said a withdrawal she made on Thursday hadn’t gone through and that she was concerned about making payroll for her 12 full-time employees. She had tried calling the FDIC multiple times, “but the number doesn’t answer…”
If you are interested in articles produced by Worthy News, please check out our FREE sydication service available to churches or online Christian ministries. To find out more, visit Worthy Plugins.