Goldman Sach’s plan for SVB underestimated danger of bad news, WSJ reports

Back in February, Silicon Valley Bank (SIVB) executives went to Goldman Sachs Group (GS) for advice, for they needed money but did not know how to raise it, AnnaMaria Andriotis, Corrie Driebusch, and Miriam Gottfried of The Wall Street Journal report. Between soaring interest rates, deposits and the value of the bank’s bond portfolio which had fallen sharply, and Moody’s Investors Services prepping for a downgrade, the bank felt it had to reset its finances to avoid a funding squeeze that would dent profits. The conversations with Goldman Sachs lasted about 10 days and led to a March 8 announcement of a nearly $2B loss and planned stock sale, both of which spooked investors. Customers with big uninsured balances panicked, trying to pull $42B out of the bank in one day. Goldman Sachs’ plan underestimated the danger that the bad news could spark. Reference Link