Letter: No surprises in Silicon Valley Bank’s failure

With minimal research, it’s not surprising that signs of failure of the Silicon Valley Bank failure were present. First, a little history of the bank.

The Silicon Valley Bank was formed in 1983 by two former managers of Bank of America. Based in Santa Clara, Calif.,it grew as the Northern California “tech-based” industry and commercial business world grew. We’ve all heard of the “Silicon Valley” for years. I related it to the high-tech and computer industry growth. “Silicon” was a reference to the silicon chips, a necessary part of tech growth, far removed from the age of transistors and vacuum tubes of an earlier electronic age. (Each had a technological boom in their own times as well.)

It grew to be 16th in the country for deposits. Think of all the tech gains we’ve seen since the 1980s. Billions of dollars of revenue were bled into a society of tech-hungry, gadget-grabbing Americans, and we soaked it up. It was our time to make life faster, easier, simpler and, yes, lazier. Don’t get me wrong, it’s not our fault. We were willing participants in a total revamping of our society. And it was great!

But, what goes up will come down, it’s said. I lived through the 2008 banking scandal. Many of the big banks received bailouts from the government under the assumption that they can’t fail. Some of the auto industry was helped also, but I don’t recall being thanked for my help. I do remember losing a home because poor public relations in the same banking industry, with a refinance, screwed us like so many others. But at least we didn’t lose all our retirement investments like millions of others did with the 401K crash. Tech also took its first big hit in 2008.

Last year, tech stocks fell 30% compared to 20% overall. Dow Jones’ U.S. Tech Index was down over 35%, with NASDAQ down over 33%. Those are the leading tech indexes, along with S&P 500 down 20%. The writing was on the wall. Of course, the CEO and CFO saw it and dumped stock early. An ongoing investigation alleges a lot of those in the know did the same. I guess it comes down to being responsible. If you had millions or more in one basket, would you keep an eye on that basket?

Thank God it’s not an issue for all banking. Pray to God an end to high interest rates, inflation and threat of recession is challenged. I believe expanding the working public, spending your earnings and lowering handouts are major factors for any kind of hope. Is it any wonder they grew the IRS at a time like this? Police the depositors, not the wasteful spending? Perfect!

Jeff McDougle



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