Andrew Yang warns of ‘mass layoffs’ and calls for government intervention after Silicon Valley bank collapse
Andrew YangThe entrepreneur, who garnered national attention during his 2020 White House run and 2021 New York City mayoralty, called for government intervention after the collapse of the Silicon Valley Bank (SVB), warning of possible mass layoffs in the near future and a “financial… Infection”. “
“Without any kind of action, you will see thousands of mass layoffs and defunct companies, an erased generation of startups,” Yang warned.
In a series of Twitter posts, the businessman called on the California government US Treasury Department intervene to prevent a series of disasters that would likely strike thousands of businesses and individuals “through no fault of their own”.
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“I think either California or the Treasury should support Silicon Valley Bank — thousands of companies will collapse next week or lay off employees for not being able to access accounts through no fault of their own,” Yang wrote.
Yang argued the collapse was not the fault of SVB customers but rather the manager of the previously esteemed bank.
“Take the equity and fire the managers.” explained Yang. “There is a big difference between being irresponsible bank manager and the thousands of customers, entrepreneurs and employees who chose to bank with what was one of the largest banks in the country.”
“Punish one, but the other is innocent except that he didn’t choose the right bank.” Yang added.
Yang predicted that layoffs would spread “financial contagion,” especially in California, where many tech startups located and uses SVB.
“[A] huge troubles especially in California and a spreading financial contagion that will infect at least a variety of regional banks,” Yang said.
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Yang argued that federal officials would have to be the SVB’s “white knight” to bail out the bank since the giant bank had a “limited number of potential bailouts.”
“The natural white knights who could save the SVB probably won’t do so unless prompted, or very much so. It’s a big bank with a limited number of potential rescuers. Again, why you probably need active leadership from officials to backstop,” Yang added.
The Federal Deposit Insurance Corporation (FDIC) announced on Friday that it would close Silicon Valley Bank, then the 16th largest bank in the United States worst US financial institution failure since the Great Recession.
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The bank was known as a focal point for a number of industries and startups in Silicon Valley. Y Combinator, an incubator startup that launched Airbnb, DoorDash, and DropBox, has regularly referred entrepreneurs to them.
SVB’s collapse happened so quickly that hours before its closure, some industry analysts hoped the bank was still a good investment. Shares of the bank were down 60% as of Friday morning after a similar drop the day before.
Concerned depositors rushed to withdraw their money amid concerns for the bank’s health, leading to its collapse in what was dubbed “a Extinction level event for startups‘ said Garry Tan, CEO of Y Combinator.
The SVB shutdown has spread to other banks in the US and abroad, with $100 billion lost in domestic equity earnings and $50 billion in value losses by European banks over the past two days, according to a Reuters calculation are.
Fox News’ Aislinn Murphy contributed to this report.
https://finance.yahoo.com/news/andrew-yang-warns-mass-layoffs-212323735.html Andrew Yang warns of ‘mass layoffs’ and calls for government intervention after Silicon Valley bank collapse