COMMITTEE DEBATES REASONS FOR BANK’S COLLAPSE

Bank, from page 1

Republicans suggested that state regulators in blue-state California and New York had dropped the ball, and some went so far as to suggest that “woke” investment strategies that embraced environmental, social and governance (ESG) considerations were to blame.

Others warned that reckless decisions by venture capitalists like billionaire Peter Thiel, a big SVB depositor, jeopardized Silicon Valley’s financial stability, especially when combined with SVB’s underwriting practices for hundreds of startups.

Warren and some Republicans also renewed questions of the competen- cy of Federal Reserve chair Jerome Powell, who last week guided his board through its ninth lending rate increase in a year, in an effort to reverse inflation.

Meanwhile, tech layoffs continued.

Crunchbase reports that more than 118,000 workers in U.S.-based tech companies (or tech companies with a large U.S. workforce) have been laid off in mass job cuts so far in 2023, which includes the most recent 9,000-person cut at Amazon and 2,200 cut at Indeed. Elon Musk announced new cuts at Twitter, whose payroll is down 75% in six months.

Whether the thousands of laid-off tech workers will find employment and stay in the region remains to be seen, but the layoffs portend ripple effects on the regional economy, with slowdowns in housing and retail growth, commercial real estate leases and development projects.

The timetable has already been stretched for the massive Google office campus and related housing/commercial developments in downtown San Jose, and it remains to be seen whether high interest rates and an economic downtown will impact plans for the giant Related Santa Clara project set to begin around Levi’s Stadium in Santa Clara this summer.

So, I know that there’s a problem. And I know that there are meaningful ways that we can go about solving—or working—on it.”

She suggested New Museum Los Gatos and other arts organizations could be part of this effort.

Commissioner Susan Burnett said while she supports diversity initiatives, she said she felt like the report was ideologically one-sided.

“Looking at the names, and the people involved, I didn’t see a good mix of other voices, maybe from the community…people who have lived here all of their life,” she said, suggesting that Los Gatos has already been doing a lot and that the report might go too far. “I think it’s almost overkill. I think we first need to use, and follow through, with what Los Gatos has already started to institute.”

She pointed out that the 2040 General Plan was recently passed not with the mandated “Environmental Justice” element, but with one that went further—a “Racial, Social, and Environmental Justice” element.

“We’re already making so many strides in this direction,” she said.

“I’m just saying, that when it comes to wanting funding—and a new, maybe, commission for this—I think it’s going a little too far.”

No action was taken during the meeting.

The deal for the viable remnants of Silicon Valley Bank, which became Silicon Valley Bridge Bank after the FDIC seized it, includes the purchase of about $72 billion in loans, at a discount of $16.5 billion, and the transfer of all the bank’s deposits, worth $56 billion. But roughly $90 billion in Silicon Valley Bank’s securities and other assets were not included in the sale, and remain in the FDIC’s control.

Silicon Valley Bank had roughly $175 billion in deposits before its collapse, which means panicked depositors pulled nearly $120 billion out of the bank in a week in its final days before regulators shut it down. First Citizens will be working to maintain and grow relationships and retrieve some of this money from SVB’s current and former technology-heavy client base.