If you haven't heard the news, a top 20 bank that was the go-to for many tech startups collapsed last week. Many experts are pointing to poor management decisions made by executives at the bank, but there's a more obvious reason for the bank's failure: it seems that the bank was hyper-focused on initiatives that fostered diversity, equity, and inclusion (DEI).
It's no secret that financial institutions have been overtly political in the past few years, a prime example being Visa and MasterCard tracking firearms purchases by their customers. However, we haven't seen any financial institutions fail as a direct result of pursuing woke business initiatives. That all changed last week, as SVB was closed by the California Department of Financial Protection and Innovation on Friday.
In retrospect, it seems that the bank's failure was inevitable because they failed to take the appropriate steps to minimize risks that every large bank has to take. In fact, SVB reportedly failed to have a person in charge of risk assessment for eight months, and the risk assessment person in their UK branch was more focused on “pro-diversity” initiatives.
Generally speaking, it's a good idea for the person who assesses risk to only be focused on that task, and to let Human Resources handle the diversity aspects of your company. Perhaps the best example of SVB's mismanagement is in Jay Ersapah, the Chief Risk Officer for SVB in Europe, Asia, and the Middle East. Ersapah describes herself as a “queer person of color from a working-class background.”
Maybe we should start focusing on the merits of people in charge of large financial institutions, instead of awarding critical roles to diversity hires. If we adopted the policy of hiring the best person for the job, maybe we wouldn't be facing a major economic crisis and SVB wouldn't have to worry about a run on their bank. If you'd like to read more about SVB's ongoing crisis, please click here to access an article from the Daily Wire. An excerpt of the article has been copied below:
Failed Silicon Valley Bank (SVB) has been hit with accusations that it was hyper-focused on so-called diversity, equity, and inclusion (DEI) initiatives and generally managed poorly.
SVB, a top 20 bank relied upon as the go-to for many tech startups, collapsed over the course of some 40 hours last week, culminating with the California Department of Financial Protection and Innovation closing it on Friday and naming the Federal Deposit Insurance Corporation (FDIC) as the receiver in an effort to protect its clients.
“This bank, they’re so concerned with DEI and politics and all kinds of stuff, I think that really diverted from them focusing on their core mission,” Florida Republican Gov. Ron DeSantis told Fox News on Sunday.
SVB reportedly failed to have someone in charge of risk assessment for some eight months, until January of this year, while the person in charge of risk assessment in the U.K. allegedly prioritized “pro-diversity initiatives” while neglecting her actual role, according to a Daily Mail report.
