Last week, Silicon Valley Bank (SVB) experienced a rapid collapse, resulting in a $1.8 billion loss. The bank faced a liquidity crisis as interest rates rose and investments in bonds lost value.
With the bank’s share price dropping by 60%, the Federal Deposit Insurance Corporation (FDIC) had no choice but to intervene and take control of the bank’s operations.
A recent report by the New York Post revealed that the bank’s board of directors consisted primarily of strong Democrats.
Among the 12 members was a major donor to Hillary Clinton, a former political appointee of President Barack Obama, and a significant contributor to Democrats living close to former House Speaker Nancy Pelosi.
The report suggests that the bank’s strategy was to align itself with the Democratic Party.
Members of the board donated to various Democratic politicians and political action committees, including Obama, Clinton, President Joe Biden, Pelosi, Senate Majority Leader Chuck Schumer, and Senator Mark Warner.
According to a source quoted by the New York Post, SVB was known as the “go-to bank for woke CEOs,” and the companies it provided loans to all shared a “woke agenda.”
The report also claims that the majority of the board members did not possess adequate banking experience, with Tom King being the only member with such expertise.
This lack of experience is likely to be a focus of the Justice Department’s investigation into the bank’s collapse. In conclusion, the fall of Silicon Valley Bank demonstrates the potential consequences of allowing politics to influence a financial institution’s strategy.
It is essential for banks to prioritize sound financial practices over political agendas in order to maintain stability and prevent similar catastrophes in the future.