LYNN LA • MARCH 15, 2023
A double dose of bad news hit one of California’s key economic engines Tuesday.
As word filtered out about two federal investigations into the demise of Silicon Valley Bank, Meta announced it will lay off 10,000 workers.
This follows a string of tech layoffs that began last year, which included Microsoft, Amazon, Google and Meta again when it laid off 11,000 workers in November, citing overhiring during the start of the pandemic.
Though many states and regions were impacted by the dot-com bubble burst of the late 1990s and the cascading effect of the 2008 Great Recession, Silicon Valley’s reputation as an industry that fuels California’s growth and innovation means its losses during these economic lows are especially acute.
But a couple of business leaders told me Tuesday that we shouldn’t be too quick to count out Silicon Valley.
- Peter Leroe-Muñoz, senior vice president of tech and innovation at Silicon Valley Leadership Group: “I really do believe that Silicon Valley will weather the storm that we’re going through at this moment. It’s just a question of how long we’re all going to need an umbrella.”
And a big storm has indeed been battering one of the valley’s most prominent financial institutions since its dramatic collapse last week. Currently under the control of the Federal Deposit Insurance Corp. after state regulators stepped in to seize it, Silicon Valley Bank will now be investigated by the Justice Department and the Securities and Exchange Commission, according to The Wall Street Journal.
The Justice Department’s investigation will specifically involve its fraud prosecutors in San Francisco and Washington. These probes are par for the course when financial companies experience big losses, and may not lead to any charges. Meanwhile, shareholders have filed a class-action lawsuit against the bank.
The failure of the bank — the go-to source of financing for many startups — ripples throughout Silicon Valley and beyond. It’s another stress point for tens of thousands of workers in the region with various jobs outside of tech, employed (or previously employed) by companies from small startups to tech behemoths alike.
These layoffs and significant financial losses further fuel the inequities that plague the area. Houses in San Francisco, San Jose and other cities in Silicon Valley, for example, often top most expensive lists. Yet the same cities have some of the largest populations of people experiencing homelessness.
Regardless, with reassurances from the federal government that it will guarantee deposits into Silicon Valley Bank, business leaders told CalMatters they have faith in the resilience of the valley’s economy.
- Derrick Seaver, president and CEO of the San Jose Chamber of Commerce: “Look at the inherent strengths of our region. The workforce, which is among the most highly educated in the world; the amount of venture capital that is concentrated in our region, more so than any other part of the globe. I don’t know if the challenges of this present moment will outweigh our longer-term fundamental strengths.”
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