Communications and the Collapse of Silicon Valley Bank

We are following with interest the debate over the causes of  the collapse of Silicon Valley Bank, intrigued by arguments that a combination of bad corporate communications and a social media blitzkrieg brought the bank down.

We agree it would have been wise for SVB to have a communications professional on its leadership team, as some observers have suggested, and that information travels faster than ever by social media. It seems to us, however, that the main causes of the bank's collapse were poor management decisions, reduced regulatory oversight and the human psychology underpinning bank runs.

Harvard economist Jason Furman supports that idea, pointing out that news has always traveled fast in small towns, whether it's by Twitter, e-mail, fax, phone, telegraph or across a bank counter, George Bailey style. Silicon Valley Bank, despite assets of nearly $200 billion, operated in a small town.

Further, there's evidence that communications designed to assuage concern over a bank's standing can backfire, as was the case with British bank Northern Rock in 2007.

It takes time and careful analysis to isolate causes in a crisis as complex as SVB's. That's vital work for policymakers, especially those willing to eschew the hot take in search of lasting solutions to this crisis and the next.