Currently, the industry is searching for the culprits of the banking run that brought down first California’s Silicon Valley Bank (SVB) and then New York’s Signature Bank. Bank run works through mass psychology that prominent influencers can easily trigger, especially in a nervous market environment. Some say it was the comments and recommendations of influential that tech mogul Peter Thiel triggered the run on SVB. However, Thiel claims he himself lost $50 million with the SVB collapse.
Tech moguls are the new leaders. Forget about politicians. Everyone who lives on social media knows how easy it is for influential people like Elon Musk or Peter Thiel to pump or dump via tweets, posts, and messenger platforms. Musk has proven this enough with Tesla stock and cryptocurrencies. Exerting massive influence may also have been one of Musk’s motives when he took over Twitter. Although the current bank run was not triggered via social media, it was certainly incubated in the tech mogul environment. And Peter Thiel is said to be one of those tech moguls that pulled the trigger.
According to a Bloomberg report, Peter Thiel’s Founders Fund had no money with Silicon Valley Bank when the bank descended into chaos. The fund withdrew millions from SVB. The Founders Fund also advised its portfolio companies that there was no downside to moving their money away from SVB, even if the risk was low. However, Peter Thiel told the Financial Times that he had $50mn in SVB when it went belly up. Thiel said he did not withdraw from his account because he believed the bank would not fail.
Other venture capitalists, including Coatue Management, Union Square Ventures, and Founder Collective, followed and counseled their portfolio companies to move funds. The rest is history. The bank experienced a $42 billion single-day withdrawal of deposits. The bank run had started, and with it, the spread of the Sudden Death virus. It swept away SVB, Signature Bank, and Credit Suisse. Others will certainly follow.
No customer will lose money at SVB or Signature Bank because of the government bail-out. The shareholders and creditors of the collapsed banks will bear the loss.
