4 ms·

SVB employees blame remote work for bank failure

17 points by signa11 4y ago

_ajoj 4y ago
Lets not blame remote work as the reason SVB "[locked] up half of its assets in a $91bn portfolio of securities that made it vulnerable to rising interest rates" and not having a hedge. This failure had nothing to do with remote work and everything to do with executives gambling. > In a story in the Financial Times out Thursday, current and former Silicon Valley Bank employees cited the bank's commitment to remote work as one reason for its failure. A bit weird for axios not to link the article in that first sentence but I believe this is it: https://archive.is/0L9UE https://archive.is/0L9UE From that article: > the bank acknowledged in its annual report that it “may experience negative effects of a prolonged work-from-home arrangement”. Then it cites this "expert": > “It is harder to have a challenging call over Zoom. It makes it harder to challenge management,” said Nicholas Bloom, a professor at Stanford University who has studied remote working extensively. “Ideas like hedging interest rate risk often come up over lunch or in small meetings.” Anything that can come up over lunch or in small meetings can be also brought up in the variety of remote work tools including: zoom/teams/mattermost/slack/email. The real headline here is SVB culture: > entertaining entrepreneurs and venture capitalists at ski trips, baseball games and private boxes at concerts. > lent billions of dollars to wineries and vineyards where it could network with clients and send wine to its customers’ parties. > “I almost felt like I was at work on a college campus" > internal conflicts as a result of its rapid expansion > spending nearly $1bn to acquire Boston Private, the unit suffered a rush of departures shortly after the deal closed And Boston Private culture? > post-merger environment as “toxic” before storming off to cross-town rivals, according to deposition testimony and internal emails made public in the company’s lawsuit against four former employees. In the span of 12 months, its assets under management fell from $9.3 billion to $7.1 billion, and the unit went from profit-maker to money-loser See https://www.bizjournals.com/boston/news/2016/07/14/the-inside-story-behindboston-privates-public.html https://www.bizjournals.com/boston/news/2016/07/14/the-insid... So again nothing to do with remote work.
- neilwilson 4y ago
  Here’s a thought experiment for you. Would this “gambling” bank be insolvent this week now the Bank Term Funding Program is in place? You may be surprised by the answer.
- superyesh 4y ago
  The points you highlight are very valid, but you cannot just say it had nothing to do with remote work. >Long after Wall Street ordered its bankers back to the office, the California-based lender’s chief executive, Greg Becker, at times worked from Hawaii, president Mike Descheneaux decamped to Florida, chief risk officer Laura Izurieta was based in a suburb of Washington and general counsel Mike Zuckert worked mostly from New York, according to several people close to the bank. I have noticed quite often that a lot of things to fall through the cracks irrespective of how many meetings you have on zoom. A lot of catch up happens offline in informal conversations. This might be mitigated on an IC level mostly given that a good team might have a well groomed backlog being fed to them. But at a leadership/design level things are still more informal and might take a few years to get to an efficient level. So dismissing that remote work could have led to a gap is probably being very narrow. The way I read this was the leadership did not handle remote work well and feedback did not flow bidirectionally well across multiple levels. When in person sometimes luck/chance just happens and might be enough to mitigate huge issues. edit: from the downvotes looks like remote work is an untouchable topic and has nothing wrong with it. /s
  - fsociety 4y ago
    If my bank requires luck to practice risk management then I am keeping gold bars under my bed.
    - superyesh 4y ago
      I just meant any organization can/has an informal structure and has to mature into a remote work structure which is relatively new.
  - signa11 4y ago
victor9000 4y ago
Interesting, I blame it on the migratory patterns of the barnacle goose. An opinion of equal value as stated in the article.
5350-uiop-1130 4y ago
How about the SVB CEO lobbying to reduce risk regulations: https://www.theguardian.com/business/2023/mar/11/silicon-valley-bank-weaken-risk-regulations-svb https://www.theguardian.com/business/2023/mar/11/silicon-val... Or SVB executives mass dumping their shares 2 weeks before collapse: https://www.newsweek.com/silicon-valley-bank-ceo-sold-million-stock-before-collapse-1787062 https://www.newsweek.com/silicon-valley-bank-ceo-sold-millio... Or SVB executives getting millions in bonuses hours before takeover: https://www.cnbc.com/2023/03/11/silicon-valley-bank-employees-received-bonuses-hours-before-takeover.html https://www.cnbc.com/2023/03/11/silicon-valley-bank-employee... as always, the shit rolls downhill. tired of this clown world.
- gnicholas 4y ago
  Does anyone know if the share sales or bonuses were larger than normal? Both were scheduled in advance (which makes the timing less suspicious), but it would still be damning if they were substantially more than normal for the bank.
- throwawaysvb 4y ago
  I don't think we could ever find a person who admits his failures. It's always if its not for that
- 000ooo000 4y ago
  Hmm no, it's definitely remote work's fault. Weak risk management is solved by c o l l a b o r a t i o n.
  - rnk 4y ago
    If we don't come to the office, then the communists win! We must somehow pull people back into the office. Even if we can't find people to hire, we must do that. There are lots of companies that are pushing this view. In reality, I think for beginning people coming to the office does help them get started, if there are people to work with them. For experienced people it's not as clear. I'm happy to work from home the past few years, and I can't see working in an office again.
aaronbrethorst 4y ago
Meta: I find it impossible to absorb any information from an Axios story. The bullet-pointed 'just the facts' style seems to be fundamentally incompatible with how I consume information. I think a big part of the problem is that their writers are required to shoehorn a fairly normal style of prose into bullets, and it just makes things feel disjointed.
- a2800276 4y ago
  In this particular case, there's just no information to absorb: not only did they not state in what way remote work contributes to bank runs, they didn't even link to the FT article their bot summarized.
Lazare 4y ago
SVB had two main risks: 1. Their despositors were overwhelmingly in tech, which meant they had tons of spare cash they needed to park when interests rates were low and VC money was plentiful, but would presumably need to pull that cash back out later when conditions changed. SVB was founded in 1983, and was presumably well aware that conditions in tech could change, which leads to the conclusion that they were just gambling that things wouldn't change. 2. They had parked an unusually high percentage of that depositor cash in long dated treasuries, which were vulnerable to having their value decline if interests rates rose. Again, SVB was founded in 1983, and was well aware that interests rates hadn't always been roughly zero, and presumably wouldn't always remain so. Again, presumably this was just a gamble that things wouldn't change. Are we to believe that SVB just totally missed these and, critically, that the reason was because they were all working remotely? Like, the risk management committee would have met, gone "wow, we should hedge our interest rate risk", and then they would have done that and there would have been no issues, but they were all trying to use Amazon Chime, and the sound just wasn't working for like, two years straight, so no hedging was done? The chief risk officer would have done their job, but they had to answer the door because a tradesman was fixing the plumbing...? What about the horrible ways they communicated with stakeholders as problems mounted? Did remote work cause that tone deaf "don't panic" statement? What about all that lobbying SVB did to reduce how strictly regulated they were? Is the story that if there hadn't been so much remote work, then somehow they would have NOT done that? ...why? Like just mechanically, how is that meant to have worked? If your story is "our execs will gamble the company away making bad interest rate bets unless their colleagues are physically there to prevent them", I don't think this is really making the executive team sound better!
- neilwilson 4y ago
  Neither of those risks are an issue though if the 'lender of last resort' is doing its job. Long dated treasuries and F&F mortgage bonds are 'safe'. They will pay out the par value on maturity come what may. Which means if the deposits run from SVB to another bank, then all that happens is that there is an increase in reserves at the Fed owned by those other banks and a decrease in reserves at the Fed for SVB. The Fed then just lends reserves back to SVB - offset by the increase from other banks. SVB still had enough income coming in to pay the rate at the Fed. Now that the Fed is lending against bonds at par via the Bank Term Funding Program, that is what will happen for other banks who find themselves in the same situation. Essentially the Fed has just reduced the long term interest rate. If regulations were reduced in scope, and the regulator declares that a bank is in compliance with those reduced regulations, then the lender of last resort really need to put its money where its regulatory mouth is. Otherwise we get the mess we're seeing now. Banks will always try to wriggle the jacket. This whole thing is a failure of regulation - where the left hand didn't seem to know what the right hand was doing. SVB may have been pushing the envelope. It's the job of the regulator to push back.
throwawaysvb 4y ago
Maybe lack of their access to strip clubs caused stupid business decisions they made. Some silicon valley startup should start ondemand strip club service
bedatadriven 4y ago
> “Ideas like hedging interest rate risk often come up over lunch or in small meetings.” Not a banker, but this strikes me as absurd. Surely this is part of soneone's key responsibilities?
signa11 4y ago
how do i know why this is flagged ?
- a2800276 4y ago
  There is a "flagged" link next to it. If enough people press it, [flagged] appears before the title. As to why people press the link: scan through the comments... The consensus seems to consider it fluffy contentless clickbait.
  - signa11 4y ago
    i see, thanks !
kkfx 4y ago
There is a clear push toward RTO but rhetoric is more and more PR so what? My two cents are: - with remote work some big&powerful have suffered losses, airlines do work for tourism but do much more for business (witch include people who migrate to another country just to work, and more or less frequently fly back home), rails similarly, exhibition and conference industry obviously as well and so on. They want the old model, because that's the name of the office model, back; - large real estate owners with big downtown's properties have seen the value of their buildings dropped, rents revenues as well, so as those above they want the office model, back; - SME working in downtown's workers services are obviously together. On the worker side: - those who can't work from remote are probably envious of those who can and find their absence around them as a bad thing, since those who can't work remotely AND live in cities tend to have smaller revenues than those who can, being together, with those who lost their downtown's services jobs means the mean richness of a city drop and this led inevitably to a general local quality of life drop; - those who can work from remote, in large parts (the least qualified, who are the most) have homes unsuitable for teleworking simply because they lack a spare room per adult + eventual space for children; another large and almost overlapping cohort do not know what desktop work means, so they try to work on a craptop on sofa, on the bed and so on and obviously find that not really comfy BUT they do not know and partially refuse the concept of having a dedicated desk with large screen(s), a real keyboard and so on, for they "for unknown reasons" offices tend to offer better ergonomics. Beside those MOST fear relocating and substantially change life, most have familiar issues in doing so etc. Those allow to justify in credible manners the RTO push, without stating the substantial point of those who loose from remote working. Another part of the game is the fact that at social level there are simply too many people who do not know what to do in a remote first, mostly tertiary sector society, they have no skill, they do not want loosing wages falling back to less qualified jobs in large geographical areas, similarly public administrations forced to act as an enterprise, especially those from big cities witch so far have much voice and "firepower" are scared by such change. Since to really develop the concept of teleworking for ALL eligible jobs, not just for the most qualified who tend to know how to work remotely effectively, it would take years, as it would take years to calibrate suburban/rural infra for a far bigger number of residents, as it would tae years to re-structure companies management for such new model hybrid work will keep be pushed, imposed and most will accept it for years. After that long and slow adaptation interim, a small batch of people at a time, remote work will became common again. I can't really estimate how many years but something between 5 and 15 in the most probable range IMO...
Overtonwindow 4y ago
That's strange, the article says that the employees blame remote work for the banks failure, but they don't actually talk about what that means. Why was it responsible for the banks failure? The article seems to go out of its way to ignore any issues with work from home, almost dismissively.

17 points by signa11 4y ago

Lets not blame remote work as the reason SVB "[locked] up half of its assets in a $91bn portfolio of securities that made it vulnerable to rising interest rates" and not having a hedge. This failure had nothing to do with remote work and everything to do with executives gambling. > In a story in the Financial Times out Thursday, current and former Silicon Valley Bank employees cited the bank's commitment to remote work as one reason for its failure. A bit weird for axios not to link the article in that first sentence but I believe this is it: https://archive.is/0L9UE https://archive.is/0L9UE From that article: > the bank acknowledged in its annual report that it “may experience negative effects of a prolonged work-from-home arrangement”. Then it cites this "expert": > “It is harder to have a challenging call over Zoom. It makes it harder to challenge management,” said Nicholas Bloom, a professor at Stanford University who has studied remote working extensively. “Ideas like hedging interest rate risk often come up over lunch or in small meetings.” Anything that can come up over lunch or in small meetings can be also brought up in the variety of remote work tools including: zoom/teams/mattermost/slack/email. The real headline here is SVB culture: > entertaining entrepreneurs and venture capitalists at ski trips, baseball games and private boxes at concerts. > lent billions of dollars to wineries and vineyards where it could network with clients and send wine to its customers’ parties. > “I almost felt like I was at work on a college campus" > internal conflicts as a result of its rapid expansion > spending nearly $1bn to acquire Boston Private, the unit suffered a rush of departures shortly after the deal closed And Boston Private culture? > post-merger environment as “toxic” before storming off to cross-town rivals, according to deposition testimony and internal emails made public in the company’s lawsuit against four former employees. In the span of 12 months, its assets under management fell from $9.3 billion to $7.1 billion, and the unit went from profit-maker to money-loser See https://www.bizjournals.com/boston/news/2016/07/14/the-inside-story-behindboston-privates-public.html https://www.bizjournals.com/boston/news/2016/07/14/the-insid... So again nothing to do with remote work.

neilwilson 4y ago
Here’s a thought experiment for you. Would this “gambling” bank be insolvent this week now the Bank Term Funding Program is in place? You may be surprised by the answer.
superyesh 4y ago
The points you highlight are very valid, but you cannot just say it had nothing to do with remote work. >Long after Wall Street ordered its bankers back to the office, the California-based lender’s chief executive, Greg Becker, at times worked from Hawaii, president Mike Descheneaux decamped to Florida, chief risk officer Laura Izurieta was based in a suburb of Washington and general counsel Mike Zuckert worked mostly from New York, according to several people close to the bank. I have noticed quite often that a lot of things to fall through the cracks irrespective of how many meetings you have on zoom. A lot of catch up happens offline in informal conversations. This might be mitigated on an IC level mostly given that a good team might have a well groomed backlog being fed to them. But at a leadership/design level things are still more informal and might take a few years to get to an efficient level. So dismissing that remote work could have led to a gap is probably being very narrow. The way I read this was the leadership did not handle remote work well and feedback did not flow bidirectionally well across multiple levels. When in person sometimes luck/chance just happens and might be enough to mitigate huge issues. edit: from the downvotes looks like remote work is an untouchable topic and has nothing wrong with it. /s
- fsociety 4y ago
  If my bank requires luck to practice risk management then I am keeping gold bars under my bed.
  - superyesh 4y ago
    I just meant any organization can/has an informal structure and has to mature into a remote work structure which is relatively new.
- signa11 4y ago

victor9000 4y ago

Interesting, I blame it on the migratory patterns of the barnacle goose. An opinion of equal value as stated in the article.

5350-uiop-1130 4y ago

How about the SVB CEO lobbying to reduce risk regulations: https://www.theguardian.com/business/2023/mar/11/silicon-valley-bank-weaken-risk-regulations-svb https://www.theguardian.com/business/2023/mar/11/silicon-val... Or SVB executives mass dumping their shares 2 weeks before collapse: https://www.newsweek.com/silicon-valley-bank-ceo-sold-million-stock-before-collapse-1787062 https://www.newsweek.com/silicon-valley-bank-ceo-sold-millio... Or SVB executives getting millions in bonuses hours before takeover: https://www.cnbc.com/2023/03/11/silicon-valley-bank-employees-received-bonuses-hours-before-takeover.html https://www.cnbc.com/2023/03/11/silicon-valley-bank-employee... as always, the shit rolls downhill. tired of this clown world.

gnicholas 4y ago
Does anyone know if the share sales or bonuses were larger than normal? Both were scheduled in advance (which makes the timing less suspicious), but it would still be damning if they were substantially more than normal for the bank.
throwawaysvb 4y ago
I don't think we could ever find a person who admits his failures. It's always if its not for that
000ooo000 4y ago
Hmm no, it's definitely remote work's fault. Weak risk management is solved by c o l l a b o r a t i o n.
- rnk 4y ago
  If we don't come to the office, then the communists win! We must somehow pull people back into the office. Even if we can't find people to hire, we must do that. There are lots of companies that are pushing this view. In reality, I think for beginning people coming to the office does help them get started, if there are people to work with them. For experienced people it's not as clear. I'm happy to work from home the past few years, and I can't see working in an office again.

aaronbrethorst 4y ago

Meta: I find it impossible to absorb any information from an Axios story. The bullet-pointed 'just the facts' style seems to be fundamentally incompatible with how I consume information. I think a big part of the problem is that their writers are required to shoehorn a fairly normal style of prose into bullets, and it just makes things feel disjointed.

a2800276 4y ago
In this particular case, there's just no information to absorb: not only did they not state in what way remote work contributes to bank runs, they didn't even link to the FT article their bot summarized.

Lazare 4y ago

SVB had two main risks: 1. Their despositors were overwhelmingly in tech, which meant they had tons of spare cash they needed to park when interests rates were low and VC money was plentiful, but would presumably need to pull that cash back out later when conditions changed. SVB was founded in 1983, and was presumably well aware that conditions in tech could change, which leads to the conclusion that they were just gambling that things wouldn't change. 2. They had parked an unusually high percentage of that depositor cash in long dated treasuries, which were vulnerable to having their value decline if interests rates rose. Again, SVB was founded in 1983, and was well aware that interests rates hadn't always been roughly zero, and presumably wouldn't always remain so. Again, presumably this was just a gamble that things wouldn't change. Are we to believe that SVB just totally missed these and, critically, that the reason was because they were all working remotely? Like, the risk management committee would have met, gone "wow, we should hedge our interest rate risk", and then they would have done that and there would have been no issues, but they were all trying to use Amazon Chime, and the sound just wasn't working for like, two years straight, so no hedging was done? The chief risk officer would have done their job, but they had to answer the door because a tradesman was fixing the plumbing...? What about the horrible ways they communicated with stakeholders as problems mounted? Did remote work cause that tone deaf "don't panic" statement? What about all that lobbying SVB did to reduce how strictly regulated they were? Is the story that if there hadn't been so much remote work, then somehow they would have NOT done that? ...why? Like just mechanically, how is that meant to have worked? If your story is "our execs will gamble the company away making bad interest rate bets unless their colleagues are physically there to prevent them", I don't think this is really making the executive team sound better!

neilwilson 4y ago
Neither of those risks are an issue though if the 'lender of last resort' is doing its job. Long dated treasuries and F&F mortgage bonds are 'safe'. They will pay out the par value on maturity come what may. Which means if the deposits run from SVB to another bank, then all that happens is that there is an increase in reserves at the Fed owned by those other banks and a decrease in reserves at the Fed for SVB. The Fed then just lends reserves back to SVB - offset by the increase from other banks. SVB still had enough income coming in to pay the rate at the Fed. Now that the Fed is lending against bonds at par via the Bank Term Funding Program, that is what will happen for other banks who find themselves in the same situation. Essentially the Fed has just reduced the long term interest rate. If regulations were reduced in scope, and the regulator declares that a bank is in compliance with those reduced regulations, then the lender of last resort really need to put its money where its regulatory mouth is. Otherwise we get the mess we're seeing now. Banks will always try to wriggle the jacket. This whole thing is a failure of regulation - where the left hand didn't seem to know what the right hand was doing. SVB may have been pushing the envelope. It's the job of the regulator to push back.

throwawaysvb 4y ago

Maybe lack of their access to strip clubs caused stupid business decisions they made. Some silicon valley startup should start ondemand strip club service

bedatadriven 4y ago

> “Ideas like hedging interest rate risk often come up over lunch or in small meetings.” Not a banker, but this strikes me as absurd. Surely this is part of soneone's key responsibilities?

signa11 4y ago

how do i know why this is flagged ?

a2800276 4y ago
There is a "flagged" link next to it. If enough people press it, [flagged] appears before the title. As to why people press the link: scan through the comments... The consensus seems to consider it fluffy contentless clickbait.
- signa11 4y ago
  i see, thanks !

kkfx 4y ago

There is a clear push toward RTO but rhetoric is more and more PR so what? My two cents are: - with remote work some big&powerful have suffered losses, airlines do work for tourism but do much more for business (witch include people who migrate to another country just to work, and more or less frequently fly back home), rails similarly, exhibition and conference industry obviously as well and so on. They want the old model, because that's the name of the office model, back; - large real estate owners with big downtown's properties have seen the value of their buildings dropped, rents revenues as well, so as those above they want the office model, back; - SME working in downtown's workers services are obviously together. On the worker side: - those who can't work from remote are probably envious of those who can and find their absence around them as a bad thing, since those who can't work remotely AND live in cities tend to have smaller revenues than those who can, being together, with those who lost their downtown's services jobs means the mean richness of a city drop and this led inevitably to a general local quality of life drop; - those who can work from remote, in large parts (the least qualified, who are the most) have homes unsuitable for teleworking simply because they lack a spare room per adult + eventual space for children; another large and almost overlapping cohort do not know what desktop work means, so they try to work on a craptop on sofa, on the bed and so on and obviously find that not really comfy BUT they do not know and partially refuse the concept of having a dedicated desk with large screen(s), a real keyboard and so on, for they "for unknown reasons" offices tend to offer better ergonomics. Beside those MOST fear relocating and substantially change life, most have familiar issues in doing so etc. Those allow to justify in credible manners the RTO push, without stating the substantial point of those who loose from remote working. Another part of the game is the fact that at social level there are simply too many people who do not know what to do in a remote first, mostly tertiary sector society, they have no skill, they do not want loosing wages falling back to less qualified jobs in large geographical areas, similarly public administrations forced to act as an enterprise, especially those from big cities witch so far have much voice and "firepower" are scared by such change. Since to really develop the concept of teleworking for ALL eligible jobs, not just for the most qualified who tend to know how to work remotely effectively, it would take years, as it would take years to calibrate suburban/rural infra for a far bigger number of residents, as it would tae years to re-structure companies management for such new model hybrid work will keep be pushed, imposed and most will accept it for years. After that long and slow adaptation interim, a small batch of people at a time, remote work will became common again. I can't really estimate how many years but something between 5 and 15 in the most probable range IMO...

Overtonwindow 4y ago

That's strange, the article says that the employees blame remote work for the banks failure, but they don't actually talk about what that means. Why was it responsible for the banks failure? The article seems to go out of its way to ignore any issues with work from home, almost dismissively.