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We've all been deluged with news about the untimely demise of SVB this week and now the inquiry starts into not just what happened, but why?
I was interested read this piece in the WSJ that seems to imply that some of this might have been down to SVB being 'distracted by diversity demands'. This is the first time I have ever heard this term used and I must confess to finding it slightly vexing.
When the dust settles and inquiries into the failure conclude I'm fairly sure that the Chief Risk Officer role being vacant for most of last year will be found to be a bigger contributor than the board being diverse....
Was there regulatory failure? Perhaps. SVB was regulated like a bank but looked more like a money-market fund. Then there’s this: In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have “1 Black,” “1 LGBTQ+” and “2 Veterans.” I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands. Management screwed up interest rates, underestimated customer withdrawals, hired the wrong people, and failed to sell equity. You’re really only allowed one mistake; more proved fatal. Was management hubristic, delusional or incompetent? Sometimes there’s no difference.
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