The customers of Silicon Valley Bank are different from some regular Joe. They are the tip of the top, cream of the crop talents leading our country's technology innovations and inventions. Many came from leading schools in our country. Still, many came from the largest, most influential leading Venture Capital firms. Some of these Venture Capitalists are the Who's Who of the Silicon Valley.
Therefore, I was appalled and dumbfounded that these highly educated, talented entrepreneurs and their revered venture capital investors would think and act irrationally and incite a bank run that looks like a movie from the 1930s.
On one of the podcasts I listened to, run by these revered venture capitalists, a podcaster said something like this: "There is No Down Side in moving the cash from Silicon Valley Bank to other banks. It is the logical thing to do. It is the responsible thing to do."
Many of these venture capitalists and their CEOs have publicly made similar statements on Twitter and other social media.
No Down Side? That is either a total lie or a demonstration of complete ignorance. I could not believe I had heard that kind of statement from the most revered people in Silicon Valley.
Had the Federal government not stepped in to backstop all the deposit accounts, the collapse of the Silicon Valley Bank would have caused a significant blow to the entire technology innovation industry.
All technology companies with bank accounts at SVB would have to stop operations because they could not pay payroll, rent, or suppliers. All the innovative products these companies were building would have died. Our country's technological innovation cycles would have stopped suddenly and caused a decade or more delay, or we may never be able to catch up.
Technology innovations are the ONLY business the USA must rely on to drive prosperity and secure our future against familiar foes like Communist China, Russia, and Iran. Without continuous and rapid innovations in Biotech, Cyber Security, AI, AgTech, EdTech, FinTech, Crypto Currency, etc., our future will be doomed.
If these many technology companies were forced to close shops quickly, the indirect economic impact would be incalculable. Not to mention that one bank's collapse will lead to many other banks' collapse, as we have seen in Signature Bank.
How could these highly educated, talented entrepreneurs and Venture Capitalists not know that a massive, unorderly, rapid cash withdrawal from the Silicon Valley bank will cause irreversible damage to their industry for many years and decades?
Had there not been a run on the Silicon Valley Bank, the bank would likely be able to sell enough of its assets (even at a loss) to come up with cash to satisfy the orderly and regular cash withdrawals from the bank. It could have been an orderly approach by rational business people. And yet, these highly revered people of Silicon Valley chose to act like the lowly uneducated hillbillies.
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