Andrew Yangthe entrepreneur who captured national attention during his run for the White House in 2020 and his run for mayor of New York in 2021, has urged the government to intervene in the wake of the Silicon Valley meltdown Bank (SVB), warning of potential mass layoffs in the near future and “financial contagion”. “
“Without any action, you will see thousands of mass layoffs and companies disappearing, a wiped out generation of start-ups.” Yang warned.
In a series of Twitter posts, the businessman urged the California government or the US Treasury Department to intervene to prevent a series of calamities that would likely affect thousands of businesses and individuals, “through no fault of their part”.
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“I think California or the Treasury Department should support Silicon Valley Bank – thousands of businesses will close or lay off people next week due to lack of access to accounts through no fault of their own,” Yang wrote. .
Yang argued that the collapse was not the fault of SVB’s customers, but of the previously esteemed bank’s executives.
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“Take equity and fire the managers.” Yang said. “There is a big difference between irresponsible bank managers and the thousands of customers, contractors and employees who chose to use a bank that was one of the biggest banks in the country.”
“Punish one, but the other is blameless except he chose the wrong shore.” Yang added.
Yang prophesied that the layoffs would particularly spread “financial contagion” in California, where many tech startups are located and use SVB.
“[A] huge problems in California in particular and a spread of financial contagion that will at least infect a host of regional banks,” Yang explained.
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Yang argued that federal officials will have to be SVB’s “white knight” to save the bank, as the huge bank has a “limited number of potential saviors.”
“The natural white knights who could save SVB are unlikely to do so unless they are induced or very much. It’s a big bank with a limited number of potential saviors. Again, why you probably need active leadership from officials to support you,” Yang added. .
The Federal Deposit Insurance Corporation (FDIC) announced on Friday that it would close Silicon Valley Bank, until then the 16th largest bank in the United States, marking the worst failure of a US financial institution since the Great Recession.
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The bank had a reputation as a go-to for a number of Silicon Valley industries and startups. Y Combinator, an incubator startup that launched Airbnb, DoorDash and DropBox, has regularly referred entrepreneurs to them.
SVB’s collapse was so rapid that hours before it closed, some industry analysts were hoping the bank was still a good investment. The bank’s shares had fallen 60% on Friday morning after a similar decline the day before.
Anxious depositors rushed to withdraw their money, fearing for the health of the bank, causing it to collapse, which can serve as ” extinction level event for startups“, according to Y Combinator CEO Garry Tan.
The shutdown of SVB has spread to other banks, both in the United States and abroad, with $100 billion in equity revenue lost domestically and $50 billion in impairment by the European banks over the past two days, according to a Reuters calculation.
Fox News’ Aislinn Murphy contributed to this report.