by smallilicon Valley Bank—which is under federal government control after becoming the second-largest bank failure in U.S. history last week—has a new CEO, Tim Maiopoulos.
Mayopoulos, who has other experience with crises, says business will continue as normal while he works to unwind the bank’s assets.
The Federal Deposit Insurance Corporation (FDIC) moved to step in on Friday after Silicon Valley Bank faced bankruptcy amid growing concerns about its cash flow and impaired assets.
On Monday, Maiopoulos–
The businessman brings decades of legal and financial leadership experience, most notably his time as chairman and CEO of Fannie Mae, a government-sponsored company that buys and guarantees mortgage loans. He led Fannie Mae at a time when it was still recovering from the 2008 financial crisis.
Mayopoulos moved quickly to address the challenge at Silicon Valley Bank, contacting the bank’s customers with a letter of assurance on his first day.
“I look forward to meeting the clients of Silicon Valley Bank,” he wrote Monday. “I come to this role with humility. I also come to this role with experience in such situations.”
Here’s what you need to know.
Who is Tim Maiopoulos?
Maiopoulos attended Cornell University as an undergraduate where he studied English until 1980, before graduating from New York University School of Law in 1984. Maiopoulos said he came from a humble background and attended Cornell with a generous financial package. help. which opened up new opportunities for him.
He began his career after law school as a clerk to a US District Court judge. Magiopoulos then worked at a law firm and from 1994 to 1996 served on the federal Whitewater investigation into Bill and Hillary Clinton’s real estate transactions. In the 2000s, Mayopoulos held senior roles at Deutsche Bank and Credit Suisses before serving as general counsel at Bank of America for five years. He was fired from the position following the recession in 2009 following Bank of America’s takeover of Merril Lynch.
Mayopoulous joined Fannie Mae months later as general counsel, vice president and company secretary. In 2012, he became President and CEO of the company, positions he held for the next six years.
During his tenure, Fannie Mae recovered from the recession and implemented new technology to bring more safety and transparency to mortgage lending. He moved in 2019 to serve as president at Blend, a cloud-based software company that processes mortgage and consumer banking transactions.
After the FDIC took control of Silicon Valley Bank last week, the agency tapped Maiopoulos to be the company’s new CEO. Once in the role, Mayopoulos assured clients that the lender would continue to be “business as usual”.
“We are here to serve you,” he wrote in a letter to customers. “I recognize that the past few days have been an extremely difficult time for our customers and employees, and we are grateful for the support of the amazing community we serve.”
In the letter, Mayopoulos explained that the FDIC transferred all assets held by Silicon Valley Bank to a “bridge bank” operated by the FDIC called “Silicon Valley Bank, NA” where depositors have full access to the funds both existing and new deposits are protected.
The Federal Reserve and the government announced Sunday that even customers with deposits above the $250,000 FDIC insured limit will have full access to their funds.
The former CEO
Before Maiopoulos stepped in, Silicon Valley Bank had been run by Becker since 2011. The FDIC announced that Becker had been removed from the role on Friday.
The trouble really began on March 8 when the bank made a surprise announcement that it was trying to raise cash through a stock sale and that it had sold $21 billion in assets at a loss of $1.8 billion in an effort to keep up with withdrawals on deposits.
In a letter to clients on March 8, Becker urged them not to withdraw funds from the bank, saying Silicon Valley Bank could handle the pressure. However, it admitted that customer deposits were lower than forecast last month. On March 9, amid a massive panic, clients tried to pull $42 billion out of Silicon Valley Bank, and its parent company — SVB Financial — saw its share price drop 60%. By the end of the day, Silicon Valley Bank had a negative cash balance of about $958 million.
On March 10, the FDIC closed the bank and took it over.
Becker has been heavily criticized for selling $3.6 million worth of Silicon Valley Bank stock less than two weeks before the collapse. The sale was part of a stock sale plan filed in January.
Silicon Valley Bank customers and employees have since largely blamed Becker for spreading panic that led to the bank’s collapse. Becker reportedly apologized to the employees.
“It is with an incredibly heavy heart that I am here to deliver this message,” Becker said in a video to staff on Friday, according to Reuters. “I can’t imagine what was going through your mind and I was wondering, you know, about your job, your future.”
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