Silicon Valley Bank failure causes stress

After ling for bankruptcy on March 10, Silicon Valley Bank was purchased by First Citizens Bank from the Federal Deposit Insurance Corporation. First Citizens will now take over the sale of all SVB’s deposits and loans. Days prior to ling for bankruptcy, SVB sold its government bonds and incurred a loss of $1.8 billion because of a signi cant increase in the interest rate of bonds at the time of the sale.

In addition to the issue with its bonds, Economics teacher Grant Blackburn said the bank failed due to faulty investment decisions.

“SVB collapsed largely because of bad risk management,” Blackburn said. “ ey should have looked at their balance sheet and realized they’re not well diversi ed. You don’t want to buy all of one asset, because if that asset does poorly, you’ve lost all your money.”

Senior Niklas Hagstroem, who said he became engrossed in researching the SVB failure after it happened, said SVB’s decision to invest in government bonds when interest rates were low was a poor decision because the bonds’ value decreased as interest rates went up. “ e fundamental business concept was kind of risky,” Hagstroem said. “ ey gambled it all on red when red had been rolled four times in a row.”

According to Blackburn, SVB’s poor decisions have a entire community. ere’s gonna be a lot of ripple e ects,” Blackburn said. “Anybody that works for the bank, their future is unknown.”

Senior Samantha Lee’s parents banked with SVB and were among those impacted by the failure. Lee said her family was able to recoup its money but also said the event opened her eyes to the risks of depositing money in banks.

“I feel that (being aware about the economy) is important because I don’t know if people understand the implications (the SVB’s failure) could have had if the federal government hadn’t stepped in,” Lee said. “( ere) could have been a recession, and that would have impacted us all.”

According to junior Roshan Nadhani, who made investments after the crash, SVB’s failure has deeper implications that extend beyond the company. He said in addition to the SVB employees who will lose their jobs, people working in other companies may face similar consequences.

“A lot of companies are ready to lay o a lot of their employees just because they couldn’t pay them,” Nadhani said. “If you’re working at a startup, you’re worried that you won’t get paid or that you might get laid o because your company is worried that you might sue them.”

Nadhani said the SVB failure will also impact the community long term as people will likely shift to

In addition, Blackburn said SVB’s failure may make people more cautious about spending money. eir future is unknown,” Blackburn said. “And so whenever you’re in an unknown situation, you are immediately going to stop spending money (and) start saving money, and that’s going to have an impact on our economy.”

Blackburn said SVB’s failure can teach people valuable lessons about nancial literacy and help them become more aware of the economy.

Blackburn said, “If you understand how banks work, and how the FDIC works, then perhaps you’re going to make better decisions and not react fearfully.” e biggest reason that we feel our business is doing worse is that compared to last year when people had stimulus checks, we now have higher gas prices and overall increased expenses,” Briggs said. “In my district, we’re all seeing a loss of tra c (compared to) last year.”

As the City of Palo Alto experiences an economic resurgence following COVID-19, a recent study from the city consulting rm Streetsense found that the commercial areas of University and California Avenues continue to struggle with storefront vacancies, with 10% of the retail spaces vacant on University Avenue and 15% on California Avenue at the end of 2022.

Vans store manager Danielle Briggs said her University Avenue store has not seen as much sales growth this year when compared to last year because of many factors.

Briggs said her store’s revenue declined by about $15,000 compared to last year, and nationally, Vans has seen a 13% decline in sales.

Another major factor in this slowed growth is the recent economic downturn, Briggs said. ere are people who can’t even go out because they don’t have a job, and here we’ve had to lower working hours,” Briggs said. “I feel like we’re probably not the only retail that’s having to adjust and have associates losing hours, which means less pay.”

A store manager at Stanford Shopping Center who agreed to be interviewed only if his name wasn’t used said he agreed in ation is an issue for retail stores, but Stanford Shopping

Center hasn’t been hit as hard as University or California Avenues because of its prime location and store diversity. e manager didn’t want his name used because he wasn’t authorized by his company to speak to the media.

“Location plays a pretty big part of how successful a business is, and a lot of businesses around here hit directly on the demographic that they’re intended for,” the manager said. “Plus, there are plenty of diverse stores here that t the needs of numerous people, so people love shopping here.”

He also said Stanford Shopping Center has major anchor stores which University and Cal Avenue do not.

“It could be that having big stores like Neiman Marcus, Nordstrom, Bloomingdale’s and Macy’s draws a larger crowd and helps smaller stores bene t from the increased foot tra c,” the store manager said.

Junior Haley Oba said the unpredictable weather that has plagued the Bay Area recently is a factor that could be harming University and Cal Avenue businesses.

“When it’s constantly raining, people are less inclined to go outside and explore shops, especially in areas where parking is limited,” Oba said. “I know Stanford Shopping Center o ers ample parking and easy access to stores, so it wasn’t a bad destination for shoppers even (with) the weather.”

To boost economic activity, Briggs said cities should build more parking.

“For stores like ours, the parking could be addressed,” Briggs said. “A lot of people want to eat and then go shopping, but having a twohour parking limit stops people from being able to shop after they eat.”

Educational consultant Ignite 2 Unite hosted a late March event to help build school spirit and culture by discussing campus climate. e 100-person workshop was held in the Peery Family Center.

Called the 4A Workshop, the sixhour training program aims to equip and empower a school’s art, athletic, activity and academic student-leaders to lead a school’s student culture, according to the Ignite 2 Unite website.

Jason Jedamski, founder of Ignite 2 Unite, said the day-long workshop helps students to nd ways to improve their schools.

“You take some student leaders from those four groups, and you bring them together to talk about their school and how to make it the best version of itself, Jedamski said.”

ASB advisor Steve Gallagher said Paly partnered with Ignite 2 Unite to encourage students to lead positive culture change.

“We’re gonna be working more on the culture itself and (asking) ‘How can we do that?’” Gallagher said. “‘How can students be more a part of leading that process?’”

Jedamski said creating a diverse atmosphere o ers an opportunity for more conversations between groups of students that traditionally would not interact.

“When they rst come in, we’ve got students from four kinds of di erent groups, Jedamski said. “ e kid in band might have never talked to the kid in basketball, so (the program hopes) to get them to talk to each other and establish some commonality.”

Freshman Ryan Leung said he was optimistic about the program’s potential to enhance Paly’s community.

“I think it will help to increase the spirit of the school,” Leung said.

Gallagher credits Principal Brent Kline for bringing the program to Paly. However, Gallagher said he is uncertain whether the 4A Workshop will continue to happen in the future.

“ is is the rst year, so I don’t know if it will be a yearly event,” Gallagher said. “I think we’ll have to take a look afterwards and see if the program comes back yearly.”

Despite the uncertainty of its future, Jedamski said he thinks the program has the capacity to transform the atmosphere on campus. “ e goal of it is to help kids recognize that if we all decide together to make our campus better, then our campus is going to thrive,” Jedamski said. “If you change what you do, you’re gonna change the feeling of the campus.”