'[Silicon Valley Bank] documents seem to indicate that corporate leadership may have been more interested in things like environmental sustainability, climate change, and diversity initiatives than risk management,' Diana Furchtgott-Roth writes.
to make a decision that leads to the failure of an institution, with penalties of unlimited fines and/or up to seven years in prison.
should not allow banks to run big bond investment portfolios without requiring them to record profits and losses daily.records 40 mentions of the environmental, social, and governance—or ESG—movement currently in vogue at many corporations and financial institutions. In a “key change,” the board expanded the Governance and Corporate Responsibility Committee’s oversight role in ESG.
It’s clear that the bank should not have been holding risky bonds in its liquidity portfolio, and a bank examiner with initiative would have questioned this strategy. The bank was investing client deposits in liquid bonds but had chosen higher-risk bonds whose value fluctuated significantly when interest rates rose and fell. When customers withdrew deposits, as they did when they needed cash for their startups, the bank needed to sell bonds, crystallizing losses.
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