A Silicon Valley Bank sign is shown at the company's headquarters in Santa Clara, Calif., Friday, March 10, 2023. (AP Photo/Jeff Chiu)
NEW YORK – He’s a good man in a business wreck, a lawyer who who kept the Bank of America on course in America’s 2008 financial maelstrom and see an answer in a crisis so Tim Mayopoulos was the go-to guy for regulators who took over what was left of Silicon Valley Bank when a run put it under.
He’s unshakeable too, someone who projects calm, just the attributes needed to settle the rattled nerves not only of depositors there – who the Federal government said won’t lose a penny – but bankers around the country anxious they could be next if people lost confidence in financial institutions.
“He is cool as a cucumber,” Brian Brooks, a lawyer who has worked with Mayopoulos throughout his career, including as General Counsel at the government-controlled Fannie Mae told The New York Times.
“Going through the financial crisis at Bank of America during all the crazy stuff that happened, he was the guy whose demeanor never changed,” Brooks said of what Mayopoulos brings to a business table.
With the bank in receivership and 85 percent of its deposits of $209 billion not covered by Federal insurance, he had to act quick to stave off fears, especially after Silicon’s failure so unnerved customers of New York’s Signature Bank over its connections to cryptocurrency that it also collapsed.
“I look forward to getting to know the clients of Silicon Valley Bank,” Mayopoulos wrote immediately, said Time magazine. “I come to this role with humility. I also come to this role with experience in these kinds of situations.”
That’s the kind of talk and approach the Federal Deposit Insurance Corporation (FDIC) that insures savings up to $250,000 was looking hoping, hoping to assure bank customers elsewhere not to panic.
Mayopoulos explained that the FDIC transferred all assets held by Silicon Valley Bank to an FDIC-operated “bridge bank” called, Silicon Valley Bank, where depositors have full access to their money and all monies protected.
Mayopoulos, 64, was graduated from Cornell and New York University School of Law and is the son of Harry Mayopoulos and Eleanor Ida Raifsnider Mayopoulos. His father was an avionics technician and his mother worked part-time at Sears.
In 2019 he became President of Blend, a technology start-up that provides cloud computing services to banks and was called in to fix the online lending platform Lending Club after its CEO was forced out, the paper noted.
Now he’s Chief Executive Officer of what’s called Silicon Valley Bridge Bank, the remnants of what happened when customers of the failed bank pulled money out beyond its cash reserves, forcing the bank to sell $21 billion of its securities portfolio at a $1.8 billion loss.
“SVB collapsed because of a stupid rookie mistake with their interest-rate-risk management: They invested short-term deposits into long-term bonds. When interest rates rose, the value of the bonds fell, wiping out the equity of the bank,” James Angel, an expert on regulation of global financial markets at Georgetown University, told Al Jazeera.
“This is the same phenomenon that wiped out the US Savings and Loan industry in the 1980s. Some people never learn,” he said.
California’s Silvergate Capital, also tied to cryptocurrency, said it would also liquidate its bank after spooked depositors took out $42 billion and was seized by banking regulators.
Mayopoulos knows the high-technology venture capitalist scene in California well too, a key asset for someone who will be trying to piece together the pieces while regulators are watching and trying to find a solid buyer.
In the meantime, he will run the bank and scour its books looking for investments and loans of value while an FDIC-appointed board of regulators monitors what’s going on.
“At this point, he just needs to run the normal operations of the bank until it’s going to be clear what’s going to happen with it,” Roberto Robatto, an Assistant Professor of Finance at the University of Wisconsin-Madison School of Business told the Times about the ongoing predicament.
“He probably has to make very conservative choices whenever issues arise,” Robatto said. “He needs to try to minimize risks going forward and make sure to protect the value of what’s left,” he added of whatever’s left.
An FDIC spokesman said Mayopoulos’s name had been on a list, created as early as 2017, of “seasoned financial services professionals” who could be called on in case of a scenario that just happened, the paper added.
Hans Morris, a Managing Partner of the venture capital firm Nyca Partners and the board Chairman of Lending Club, said Mayopoulos has the savoir-faire to make it whole again.
“He bridges those three worlds — the political world, the financial world and the venture ecosystem,” Morris said. “He’s very good at taking a complex set of variables and facts and different interests, and sorting them into a solution,” like Russell Crowe’s character in A Beautiful Mind who could look at a massive set of numbers on a wall and find the one he was looking for – the answer.
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