According to the US newspaper, Goldman Sachs’ project had “a fatal flaw: it underestimated the danger of a crisis of confidence triggered by an avalanche of bad news”
The closure by the Californian authorities of the Silicon Valley Bank, according to the Wall Street Journal, was also caused by an incorrect assessment by Goldman Sachs and its plan to save the bank from a desperate situation.
“The danger of a crisis of confidence underestimated”
Those were hectic days in early March for Silicon Valley Bank, and the Wall Street Journal has tried to reconstruct what happened. According to the prestigious newspaper, the Californian bank had turned to Goldman Sachs after being warned by Moody’s about a possible downgrade, with the aim of quickly raising funds through a private placement, in which the two private companies could also participate -equity General Atlantic and Warburg Pincus. The plan however. as the WSJ points out, it failed because “the danger of a crisis of confidence triggered by an avalanche of bad news was underestimated”, effectively causing the closure of the SVB.