Baby Steps Toward Peace: What to Expect From Russia-Iran-Syria-Turkiye Meeting in Moscow

©Sputnik/Alexei Druzhinin//Go to the mediabank

The past two months have witnessed dramatic changes in the Middle East’s security architecture, with February’s devastating earthquakes sparking an outpouring of diplomatic and humanitarian support for war-torn Syria and giving rise to hopes that the US-led 12-year-old dirty war against the country may finally be reaching its end.

The deputy foreign ministers of Russia, Syria, Iran and Turkiye are preparing to hold quadripartite talks in Moscow this week. The negotiations, expected to stretch out over two days, will be the first direct talks between Syrian and Turkish officials since December, when Moscow hosted the two countries’ defense and intelligence ministers – the first of their kind in more than a decade, to explore a possible normalization of ties.

Syrian media reported Sunday that Assistant Foreign Minister Dr. Ayman Sousan would be leading the Syrian delegation. Sousan told reporters that he and his Russian and Iranian colleagues would hold bilateral consultations on Monday, and that a quadripartite meeting with Turkiye would take place on Tuesday.

Damascus’ focus, he said, will be negotiating the withdrawal of Turkish troops from Syrian territory, joint efforts to combat terrorism, and non-interference in Syria’s internal affairs.

Officials in Ankara confirmed last week that Turkiye would take part in the negotiations, with an anonymous senior official saying the talks would constitute “a continuation of the ministerial-level meetings that began during the normalization process.” No “significant decisions” are expected, according to the official, given that there will be “no ministerial-level participation” at these particular negotiations.

Iranian Foreign Minister Hossein Amir-Abdollahian confirmed Iranian participation in the talks during a press conference alongside Russian Foreign Minister Sergey Lavrov last week, and said the “rapprochement of the views of Turkiye and Syria” will be their focus.

“Tehran and Moscow will also make efforts to bring these views closer together. And if some framework is determined at these negotiations, the next meeting can be held at the level of foreign ministers,” Amir-Abdollahian said.

Iran joined the Russian-led diplomatic normalization process in January, with Russian Foreign Minister Sergei Lavrov saying it was “absolutely logical” for Tehran to take part, since Moscow, Tehran and Ankara are all members of the Astana Process on Syrian peace.

Regional Realignment

Russia, which enjoys friendly relations with both Syria and Turkiye, has spent months seeking to bring Damascus and Ankara closer to normalization after more than a decade of mutual animosity.

“We believe that the differences between Damascus and Ankara can be overcome, and will continue to assist the parties in finding mutually acceptable solutions in the interest of normalizing interstate relations between them and restoring traditional Syrian-Turkish good neighborliness,” Russian Deputy Foreign Minister Mikhail Bogdanov told Sputnik back in February.

The diplomat expressed confidence that Turkish forces in Syria – the key bone of contention between Damascus and Ankara, can be resolved, since the Turkish side has reaffirmed at the highest levels “its commitment to the sovereignty, unity and territorial integrity of the Syrian Arab Republic.” This position is “recorded in a number of Russian-Turkish documents and joint statements of the Astana Troika,” Bogdanov pointed out.

Russia’s commitment to restoring Syrian-Turkish ties was spelled out in a new foreign policy concept last week. The document, signed into law by President Putin on Friday, formally outlines Moscow’s commitment to “reconciling differences relations” between Syria and its neighbors, and in “helping resolve and overcome consequences of armed conflicts” in the Middle East in general.

Russia, the policy says, will focus, going forward, on “developing the full-scale cooperation with the Islamic Republic of Iran, providing comprehensive support for the Syrian Arab Republic, and deepening the multifaceted mutually beneficial partnerships” with Turkiye, Saudi Arabia, Egypt, and other Organization of Islamic Cooperation members.

The restoration of Syrian-Turkish ties is key to this equation. When the CIA-led dirty war in Syria began in the early 2010s, Turkiye and other countries including Saudi Arabia, Qatar, and Israel joined the attempt to overthrow Syrian President Bashar Assad, facilitating the flow of Islamist militants into the country, and the export of oil, ancient artifacts and other wealth out of it.

Russia’s intervention in the conflict in 2015 helped slow these flows to a trickle, and Turkiye subsequently shifted gears to supporting rebels in Idlib province, and carrying out multiple military operations in Syria against Daesh (ISIS)* and US-backed Syrian Kurdish militants with suspected ties to the Kurdistan Workers’ Party – which Ankara designates as a terrorist group.

Turkiye and its allies currently control about 10 percent of Syria’s territory, and Damascus has repeatedly demanded their withdrawal (a demand Syrian authorities have also applied to US and Israeli forces). Emphasizing the significance of the issue to Damascus, President Assad said last month that he would not agree to meet with Turkish President Recep Tayyip Erdogan until Ankara agreed to end its occupation.

“This is linked to arriving at a stage where Turkiye would clearly be ready and without any ambiguity to exit completely from Syrian territory and end its support of terrorism and restore the situation that prevailed before the start of the war on Syria,” Assad told a Sputnik reporter in mid-March after a meeting with President Putin.

Wake Up Call for Washington

Last month, China brokered a landmark normalization of relations agreement between long-time regional rivals Iran and Saudi Arabia, with the US left sidelined from the negotiations and meeting the news with sour grapes.

Meanwhile, Saudi and Syrian officials recently told US media that the two countries were nearing a Russia-brokered normalization of ties agreement. Syrian and Egyptian officials are also in “advanced discussions” on the full restoration of diplomatic relations, with Syrian Foreign Minister Faisal Mekdad traveling to Cairo for talks with his Egyptian counterpart, Sameh Shoukry, on Saturday.

In February and March, President Assad traveled to Oman and the United Arab Emirates – which became the first Gulf nations to take steps to restore ties with Damascus in 2019 and 2020, respectively, to discuss ways to boost ties and facilitate Syria’s return to the Arab League.

The normalization of Syrian-Turkish ties, as a key component of Syria's triumphant diplomatic 'return' to the region, could prove a devastating blow to US power, demonstrating that Washington’s dirty war tactics, and longstanding attempts to sanction Damascus into submission, are no longer a convincing argument to regional powers – even those with a long-standing tradition of close links to Washington. It will also prove a boon to President Assad, demonstrating his ability to withstand a dirty war against his country by some of the wealthiest and most powerful nations on Earth and live to tell about it.

Switzerland to Investigate Buyout of Credit Suisse by Main Rival UBS

©AFP 2023/FABRICE COFFRINI

With reverberations from the ongoing banking crisis continuing to be felt across the Western financial system, Swiss officials say they need to double-check the paperwork as their country’s biggest bank attempts a takeover of its struggling rival.

Switzerland has opened an investigation into the takeover of the beleaguered Credit Suisse bank by its rival UBS Group, authorities announced Sunday.

The nation’s Federal Prosecutor said in a statement that the office is looking into whether executives at either Credit Suisse and UBS committed crimes, but didn’t elaborate about the direction of the investigation.

"The Office of the Attorney General wants to proactively fulfill its mandate and responsibility to contribute to a clean Swiss financial center and has set up a monitoring system so that it can take action immediately on any issues that fall within its area of responsibility," the prosecutor's office stated.

The central bank said that if the investigation turned up any serious irregularities, investors' deposits would be guaranteed.

UBS, which reappointed former CEO Sergio Ermotti ahead of the mergers, reportedly insists that its "number one priority is to stabilize the situation".

The chairman of the board of directors of the new super-bank described the merger as not only "the biggest transaction" since the 2008 financial crisis, but "the first time" that banks of global significance will combine forces.

Credit Suisse agreed to a merger with UBS in March just one week after getting a $54 billion bailout by the Swiss government which failed to stem a massive drop in share prices – a bailout which indicated that the bank had been deemed "too big to fail." Though it’d been on a steady slide for years, Credit Suisse’s shares have plummeted in value by four times in as many months since December.

With the walls closing in, the embattled company’s investors decided in March to be absorbed by their rival UBS for $3.25 billion in a government-supervised deal.

UBS, the country’s largest bank, has declared that it could end up laying off up to 30% of its workforce in the wake of the buyout. In a worst-case scenario, that could mean that as many as 36,000 people lose their jobs.

Russia’s flag hoisted over Artyomovsk, city technically captured — Wagner PMC founder

A Wagner Group soldier guards an area in the city of Artyomovsk (Bakhmut).
©Valentin Sprinchak/TASS, archive

Russia’s flag has been hoisted over Artyomovsk (called Bakhmut in Ukraine) city hall, Yevgeny Prigozhin, the founder of the Wagner private military company, said on Monday.

"April 2, 23:00 precisely. Behind me is the building of (Artyomovsk’s) city administration. This Russian flag is for Vladlen Tatarsky, (the Russian military reporter killed in a blast in St. Petersburg on Sunday). ‘In grateful memory,’ is written on this flag. Technically we have captured Bakhmut," he said as quoted by the Telegram channel of his press service.

Prigozhin noted that the commanders of Russian units that captured the city hall and the entire central district "will carry and place the flags." "The adversary remains in Western blocks," he added.

The head of the Russian private military company (PMC), Evgeny Prigozhin, has announced a milestone achievement in the battle for the city of Artryomovsk (known in Ukraine as Bakhmut), publishing a video allegedly taken in front of the town’s administrative building on Sunday evening.

“We hoisted the Russian flag with the inscription ‘Good memory to Vladlen Tatarsky’ and the flag of PMC Wagner on top of the city administration of Bakhmut,” Prigozhin said in the clip.

Prigozhin’s announcement comes just hours after prominent Russian military blogger Tatarsky (real name Maksim Fomin) was killed in an apparent improvised explosive device blast in a café in Saint Petersburg on Sunday afternoon.

“Legally speaking, Bakhmut is taken. The enemy is concentrated in the western districts,” the head of the PMC added.

The battle for Artyomovsk/Bakhmut has emerged as one of the most intensive and bloody engagements of the armed conflict in Ukraine, with both sides reportedly suffering significant casualties. Western officials have claimed that the city poses no strategic military value, but Ukrainian President Vladimir Zelensky pledged to defend it as long as possible after proclaiming the city a fortress.

Kiev’s attempts to cling onto Bakhmut, regardless of the losses, has “almost destroyed the Ukrainian army,” Prigozhin claimed earlier this week. However, Wagner fighters, who led the charge to capture the Donetsk People’s Republic city, also took “a serious beating,” he acknowledged.

The Donbass fighter-turned-war correspondent was killed in an explosion at a St. Petersburg café on Sunday. Russia’s Investigative Committee has opened a criminal investigation into the incident. Who was Vladlen Tatarsky? Here’s what we know.

In the spring of 2014, Ukrainian forces launched a full-blown offensive into the Donbass in an attempt to crush a nascent pro-independence rebellion by local residents and militias. By the summer, fighting approached right up to the prison where Fomin was doing his time, with shells, mortar rounds and bullets hitting the detention center and killing and wounding several inmates. Fomin managed to escape in the chaos, and soon joined up with militiamen fighting off Ukrainian forces.

Between late 2014 to 2019, Fomin served in several Donbass militia units, including the Vityaz Regiment, the LPR’s Fourth Brigade, and the Vostok Battalion. Fomin was briefly arrested by militiamen in 2014 after they learned of his criminal record, but received a pardon from late DPR leader Alexander Zakharchenko in recognition of his service.

Fomin began covering events in the Donbass as a journalist in 2019 after retiring from military service.

His audience on social media ballooned after February 2022 with his front line coverage of Russia’s military operation, where he combined his job as a correspondent with service as a military drone operator. Fomin's videos spread like wildfire across the internet, reaching not only Russian-language users, but foreigners as well.

Fomin received popularity – and occasional notoriety, for his brusque and to-the-point reporting style, and for his no-holds barred critical coverage, including discussion of some of the problems faced by Russian forces in the conflict.

‘Big Loss’

Boris Rozhin, a military expert with the Center for Military-Political Journalism, called Fomin's death a "big loss," saying his reports constituted an honest appraisal of the real situation on the front. "He did not hesitate to reveal the problematic points which needed to be fixed. And in some areas, progress really began to be made after that."

Russian lawmaker and Russian Liberal Democratic Party fraction chief Leonid Slutsky said that while he would trust investigators in the case to figure out what happen there is every reason to talk about a “Ukrainian trace” in the attack on Fomin, “as in the case of the murder of Daria Dugina."

"It has the same handwriting. This crime was committed by those who hate Russia, who are ready to kill Russian patriots,” Slutsky wrote in his Telegram page on Sunday evening.

Russian Foreign Ministry spokeswoman Maria Zakharova pointed out that Russian journalists are under constant threat of reprisal attacks by the Kiev regime and its patrons.

“They are subjected to harassment, branded in the literal sense with special markings on digital platforms on American internet companies, and face a ‘witch hunt’ in the Western media,” she said.

“Not a single case of the violent death of a Russian journalist, assessed by the Kiev regime and its thugs as a ‘success’ has been investigated, or even treated with elementary human sympathy by Western countries, international organizations or foreign professional communities.”

Zakharova blasted Kiev’s “undisguised delight” in the wake Fomin's death and said the lack of reaction in the White House, Downing Street and Elysee Palace “speaks for itself” in light of the lip service they typically pay to the "well-being of journalists and freedom of journalism."

Ukrainian rockets strike repelled in southern Donetsk direction — defense ministry

Russia’s battlegroup East has repelled Ukraine’s strikes from multiple rocket launch systems in the southern Donetsk direction, the battlegroup’s spokesman Alexander Gordeyev said on Sunday.

"Combined rocket strikes with two HIMARS and three Smerch rockets were repelled in the southern Donetsk direction. Russian S-300 and Buk air defense systems hit all the targets. Osa-AKM and Strela-10 air defense systems downed two Valkyrie and two Fury drones," he said, adding that a Leleka drone was downed from small arms in the Zaporozhye direction.

According to Gordeyev, an attempt by a Ukrainian sabotage and reconnaissance group to penetrate into the rear of Russian forces in the Zaporozhye direction was thwarted. Five militants were killed. "An enemy howitzer was spotted and destroyed by a Russian Msta self-propelled system near the settlement of Zaliznichnoye in the course of counterbattery activity," he added.

"In the south Donetsk direction, combined missile strikes involving two rockets of the HIMARS multiple launch rocket system [MLRS] and three projectiles of the Smerch MLRS were repelled. The crews of the S-300 and Buk anti-aircraft missile systems destroyed all targets," the spokesperson said.

According to the Russian Defense Ministry, Russian forces have also shot down three Ukrainian drones.

In the south Donetsk direction, Russian troops have thwarted "two attempts by the enemy to carry out reconnaissance by force," "a reconnaissance group was destroyed, and up to 20 militants were eliminated," the defense ministry spokesperson told.

In addition, in the Zaporozhye direction, an attempt by Ukrainian forces to send a sabotage and reconnaissance group to the rear of Russian troops was thwarted and five militants were killed, the spokesperson said.

Russia launched its special military operation in Ukraine in February 2022, after the Donetsk and Lugansk people’s republics appealed for help in defending themselves against Ukrainian provocations. In response to Russia’s operation, Western countries have rolled out a comprehensive sanctions campaign against Moscow and have been supplying weapons to Ukraine.

On September 30, 2022, Russian President Vladimir Putin and the heads of the Donetsk and Lugansk people's republics, as well as Kherson and Zaporozhye regions, signed agreements on the accession of these territories to Russia, following referendums that showed that an overwhelming majority of the local population supported becoming part of Russia.

Western countries have significantly increased their economic and military support for Kiev, which now includes air defense and multiple rocket launching systems, tanks, self-propelled artillery, anti-aircraft guns, armored vehicles and various types of ammunition. Kremlin spokesman Dmitry Peskov said in January that arms supplies to Ukraine by Western countries testify to their direct and growing involvement in the conflict.

New York Times ‘unreadable propaganda’ - Musk

Elon Musk leaves the Phillip Burton Federal Building and United States Court House in San Francisco, California, January 24, 2023
© AP / Benjamin Fanjoy

Twitter CEO Elon Musk has branded the New York Times “unreadable propaganda” after the newspaper refused to pay for verification. Earlier, Twitter began removing its iconic blue checkmarks from accounts that had received the badge before Musk’s subscription system was introduced.

Twitter announced last month that, as of Saturday, it would begin removing “legacy verified checkmarks” from accounts that were verified before Musk announced his subscription system last year. The New York Times declared on Thursday that it would not pay the $1,000 per month required of businesses, or reimburse its employees for signing up for Twitter’s $8 per month personal plan.

The New York Times’ @nytimes account lost its checkmark on Saturday, meaning its tweets will no longer show up in the ‘for you’ tab, the default timeline where Twitter users see content from accounts they follow.

Tweeting on Saturday, Musk suggested that the vanishing of Tweets from the Times would be no great loss for most users.

“The real tragedy of @NYTimes is that their propaganda isn’t even interesting,” the billionaire declared. “Also, their feed is the Twitter equivalent of diarrhea. It’s unreadable.”

“They would have far more real followers if they only posted their top articles,” Musk continued, adding that the “same applies to all publications.”

The New York Times is one of a number of US newspapers and news outlets boycotting the paid verification system. The White House is also refusing to pay for blue checkmarks for its staffers, according to a report by Axios on Friday.

Musk purchased Twitter for $44 billion last October, promising a host of reforms that would roll back the platform’s censorship policies and make it a “digital town square” for free and open debate.

While he has restored hundreds of previously banned accounts – including that of former US President Donald Trump – and relaxed Twitter’s content moderation rules, he has simultaneously struggled to boost the platform’s declining revenue.

Despite Musk rolling out paid subscriptions and firing around three quarters of Twitter’s staff, the company is currently worth half of what Musk paid for it last year, according to the Wall Street Journal.

Musk has previously clashed with the New York Times and suspended reporter for the paper, Ryan Mac, in December for sharing information about the billionaire’s whereabouts.

"Criticizing me all day long is totally fine, but doxxing my real-time location and endangering my family is not," Musk tweeted at the time.

In multiple tweets early on Sunday morning he said the publication was guilty of publishing boring 'propaganda' and said its feed was like 'diarrhea' because it put out too many tweets

The real tragedy of @NYTimes is that their propaganda isn’t even interesting

— Elon Musk (@elonmusk) April 2, 2023

The Times' primary account has 54.9 million followers on Twitter and is the most prominent account thus far to lose its gold institutional verification.

For a business on Twitter to be verified with a gold checkmark it is required to pay $1,000 each month. For individual users the cost is $8 per month.

Musk extended his criticism of how the Times runs its Twitter feed to other publications as well. '[The Times] would have far more real followers if they only posted their top articles. Same applies to all publications,' he said.

He may have been referring to the way in which it posts dozens of times to its Twitter page every day. On Saturday its main account @nytimes put out around 80 tweets in a single day.

The tweets almost always contain links to stories on its website, a widely adopted practice among digital publications to direct traffic onto their sites.

Lavrov tells Blinken that it is up to court to decide about Gershkovich’s future

©Mikhail Metzel/TASS

Russian Foreign Minister Sergey Lavrov has told US Secretary of State Antony Blinken that it is up to court to decide about the future of The Wall Street Journal reporter Evan Gershkovich who was detained on espionage charges in Russia, the Russian foreign ministry said on Sunday after their telephone conversation.

"In light of the established evidence of the US national’s illegal activities, his future will be determined by court. The American embassy in Moscow was duly notified about his detention," the ministry said.

"In the context of the discussion of the issue of the detention of US national Gershkovich in Russia on suspicion of espionage, which was raised by the Secretary of State, Blinken’s attention was drawn to the necessity to respect the Russian authorities’ decision made in conformity with law and Russia’s international commitments," the ministry said.

"Lavrov stressed that Gershkovich had been detained red-handed when he was receiving secret data and was collecting data constituting a state secret acting under the guise of a journalist’s status."

The Russian top diplomat also told his US counterparts that it is inadmissible to fan hysteria around the journalist’s arrest. "It was stressed that it is inadmissible for Washington officials and Western mass media to stir up hysteria with an obvious aim of giving a political overtone to this case," the ministry said.

According to the ministry, Lavrov and Blinken also touched upon several other bilateral matters.

The call was initiated by the US side. Lavrov and Blinken had a ten-minute meeting on the sidelines of the Group of Twenty meeting in New Delhi. According to the Russian minister, the meeting was quite constructive. The topics included the situation in the sphere of strategic stability in the context of the New START treaty and Ukraine.

The Public Relations Center of Russia’s Federal Security Service (FSB) said earlier that Evan Gershkovich, "acting at the behest of the American side, collected information constituting a state secret about the activities of an enterprise within Russia’s military-industrial complex."

The reporter was detained in the Urals city of Yekaterinburg. The FSB investigators opened a criminal case against the US citizen under Article 276 of the Russian Criminal Code ("Espionage"). On March 30, Moscow’s Lefortovo district court sanctioned Gershkovich’s arrest until May 29.

In light of this, The Wall Street Journal (WSJ) published a statement expressing deep concern for the safety of Gershkovich. According to the WSJ, Gershkovich covers Russia from his post at the newspaper’s Moscow bureau.

Washington should respect decisions made by the Russian authorities in accordance with the nation’s own laws and international obligations, Russian Foreign Minister Sergey Lavrov told US Secretary of State Antony Blinken on Sunday. The two discussed the arrest of Wall Street Journal correspondent Evan Gershkovich, who was charged with espionage in Russia earlier this week.

Gershkovich was “caught red handed” trying to obtain state secrets under the guise of journalism, Lavrov told Blinken in a phone call, the Russian Foreign Ministry said in a statement. Moscow also informed the US Embassy about his arrest “through an established procedure,” the statement added.

Russia considers it unacceptable that Washington officials and the US media are trying to hype this case and portray it as political, the foreign minister said.

Blinken “conveyed the United States’ grave concern over Russia’s unacceptable detention of a U.S. citizen journalist” and called for his immediate release, the State Department said in a statement, adding that the two officials also discussed ways of creating “an environment that permits diplomatic missions to carry out their work.” Moscow only noted that issues related to bilateral ties were discussed.

On Thursday, Russia’s Federal Security Service (FSB) reported that it had detained Gershkovich as he was allegedly trying to obtain classified information about a defense plant located in the Russian Urals. The FSB also said he is now suspected of espionage, a crime punishable by up to 20 years in prison.

Following the arrest, the WSJ demanded that all Russian journalists and the country’s envoy be expelled from the US, saying it is the “minimum to expect” in this case. It also accused the administration of President Joe Biden of showing weakness, and called for a tougher response. Kremlin spokesman Dmitry Peskov ridiculed the WSJ’s demand as “absurd and wrong.”

Silicon Valley Bank’s risk model flashed red. So its executives changed it

A Silicon Valley Bank branch in San Francisco last month. (David Paul Morris/Bloomberg News)

Flush with cash from a booming tech industry, Silicon Valley Bank executives embarked on a strategy in 2020 to juice profits that quickly triggered an internal alarm.

In buying longer-term investments that paid more interest, SVB had fallen out of compliance with a key risk metric. An internal model showed that higher interest rates could have a devastating impact on the bank’s future earnings, according to two former employees familiar with the modeling who spoke on the condition of anonymity to describe confidential deliberations.

Instead of heeding that warning — and over the concerns of some staffers — SVB executives simply changed the model’s assumptions, according to the former employees and securities filings. The tweaks, which have not been previously reported, initially predicted that rising interest rates would have minimal impact.

The new assumptions validated SVB’s profit-driven strategy, but they were profoundly misplaced. Over the past year, interest rates have climbed nearly five percentage points, the fastest pace since the 1980s. Meanwhile, the tech industry has entered a post-pandemic swoon, causing SVB’s elite clientele to withdraw cash far faster than bank executives had expected.

On March 8, the bank was forced to raise additional cash by selling securities at a $1.8 billion loss. That touched off panic among SVB clients, who staged one of the biggest bank runs in U.S. history. Fanned by social media, depositors tried to withdraw $42 billion in a single day. The next morning, the bank collapsed and federal regulators took control.

The episode shows that executives knew early on that higher interest rates could jeopardize the bank’s future earnings. Instead of shifting course to mitigate that risk, they doubled down on a strategy to deliver near-term profits, displaying an appetite for risk that set the stage for SVB’s stunning meltdown.

“Management always wanted to tell a growth story,” one former employee involved in the bank’s risk management said. “Every quarter, there was always this pressure to deliver earnings.”

The new revelations come as lawmakers and regulators review what a senior Federal Reserve official called a “textbook case of mismanagement” leading to the nation’s second-largest bank failure. Much of their focus will turn to the arcane world of managing interest-rate risk.

SVB’s new projections took effect last year and assumed that cash flow from deposits would stay consistent for longer, softening the projected bite of higher interest rates. Before changing the model, a 2 percent interest-rate hike would drop a measure of future cash flows by more than 27 percent; afterward, the hit was less than five percent, according to the bank’s securities filings.

Pushing for the change in assumptions was Dan Beck, SVB’s chief financial officer, according to one former employee, and it was approved by the bank’s Asset Liability Management Committee, which manages interest-rate risk, both former employees said. The change made several mid-level bank officials uncomfortable, one person said, though there was historical data on deposits to support it.

Efforts to contact Beck were unsuccessful, and lawyers representing him in a lawsuit didn’t respond to requests for comment. Efforts to contact Michael Kruse, who headed the bank’s Asset Liability Management Committee, according to the former employees, were also unsuccessful.

One of the former employees said changing assumptions about interest-rate risk were shared with federal and state regulators in late 2021 or 2022.

An official at the California Department of Financial Protection and Innovation said it could not comment on “confidential supervisory information.”

Michael Barr, the Fed’s vice chair for supervision, testified to a Senate committee Tuesday that its supervisory team cited the bank for “ineffective board oversight” and “risk management weaknesses” in May. A Federal reserve spokesman declined to comment beyond those public statements.

SVB was a financial pillar of Silicon Valley start-ups, lending money to companies with untested business models but high potential for growth. As SVB prospered alongside the start-ups it aided, top executives increasingly thought of themselves as part of the industry they served and prioritized highflying returns, according to current and former employees. For a time, they succeeded: The stock price of SVB Financial Group, the bank’s holding company, tripled in less than two years as deposits grew at breakneck speed.

Greg Becker, SVB’s chief executive, was given to enthusiastic pronouncements on the prospects of start-ups and tech firms, even in recent downtimes. He saw himself as more venture capitalist than banker, according to some who know him.

“He thinks about taking some risks to make effective investments in companies, which is not how banks normally do them,” a longtime venture capitalist who often dealt with Becker said, speaking on the condition of anonymity to preserve relationships in the Silicon Valley finance world. “It’s fair to say he was more focused on the upside than risk management.”

A spokesman for Becker declined to comment for this article.

SVB’s rapid growth during the early years of the pandemic created several stresses. The bank had to invest a mountain of customer cash at a time of rock-bottom interest rates. To maximize its return, the company purchased longer-term mortgage and government-backed securities that pay higher interest than the bank passed on to its depositors, allowing it to show sparkling financial performance every quarter for two years.

In an apparent bet that interest rates would go down last fall, SVB sold for a profit the financial instruments it used to hedge against the risk of higher rates, according to a company presentation. Instead, the opposite happened: The Federal Reserve began to raise interest rates more aggressively last summer to tamp down inflation. That reduced the value of SVB’s securities portfolio, meaning the bank would take a loss if it had to sell.

“They thought they could never go wrong,” said a former bank official who spoke on the condition of anonymity to discuss internal business practices, recalling an internal stress test in late 2018 or 2019 that showed SVB could lose at least a third of its deposits over two years. Executives directed that that model also be reworked. “If they see a model they don’t like,” the official said, “they scrap it.”

Kate Mitchell, a venture capitalist and chair of the SVB board’s risk committee, didn’t respond to a request for comment.

In an apparent bet that interest rates would go down last fall, SVB sold for a profit the financial instruments it used to hedge against the risk of higher rates, according to a company presentation.

Instead, the opposite happened: The Federal Reserve began to raise interest rates more aggressively last summer to tamp down inflation. That reduced the value of SVB’s securities portfolio, meaning the bank would take a loss if it had to sell.

“They thought they could never go wrong,” said a former bank official who spoke on the condition of anonymity to discuss internal business practices, recalling an internal stress test in late 2018 or 2019 that showed SVB could lose at least a third of its deposits over two years. Executives directed that that model also be reworked. “If they see a model they don’t like,” the official said, “they scrap it.”

Kate Mitchell, a venture capitalist and chair of the SVB board’s risk committee, didn’t respond to a request for comment.

The behavior of customers depositing money is a key variable that banks use in developing risk models. One metric, closely tracked by banks and their examiners, estimates future cash flows and how sensitive they are to changes in interest rates. It was this metric, called the economic value of equity, that triggered a warning in mid-2020, according to the former employees.

SVB hired a consultant, Curinos, to review its interest-rate risk model, according to the former employees. The bank first disclosed the review of its model in May and finalized the change in the second quarter of 2022. But by the end of the year, SVB left out the economic value of equity — which it had reported for a decade — from its public interest-rate analysis.

Curinos declined to comment on whether it did any work for SVB, adding in a statement that the company works with banks and “routinely analyzes customer behavior to assess the likelihood that their balances will change based on different stimuli, such as interest rates.”

In catering to start-ups and tech companies, the bank had fewer customers than most banks its size. At the end of last year, 93.8 percent of SVB’s deposits were above Federal Deposit Insurance Corp. limits and thus uninsured, the highest proportion among large U.S. banks, according to S&P Global. That made it more exposed to the risk of customers pulling their money, some felt.

In April 2022, SVB parted ways with its chief risk officer of nearly six years, Laura Izurieta. The bank said that it “initiated discussions with Ms. Izurieta about a transition” in early 2022 and that she stayed on to help with “transition-related duties” until October. SVB didn’t disclose this until March 3, when a securities filing revealed it didn’t hire a new chief risk officer until late December.

Izurieta didn’t respond to requests for comment.

As late as July, Beck, the company’s chief financial officer, said on an earnings call that “we’re still well positioned to the upside for higher rates.” But pressure was mounting on SVB as interest rates rose faster than the company had expected.

When the company filed its quarterly earnings report the following month, it revealed that its long-term securities — accounting for about 45 percent of its total assets — had an unrealized loss of $11.2 billion, up dramatically from a $1.3 billion unrealized loss just six months earlier. Three months later, unrealized losses totaled nearly $16 billion.

Compounding SVB’s troubles, the bank was paying higher interest to keep customers from pulling their money while borrowing at higher rates.

By the end of 2022, SVB’s deposits were costing the bank almost twice as much as the median among a group of peers, according to Moody’s.

Some on Wall Street were also taking notice. Chris Kotowski, an analyst at Oppenheimer & Co., downgraded SVB’s stock from buy to hold last September after the bank indicated its income from interest payments was under pressure.

“That just set the alarm bells off for me,” Kotowski said.

With SVB’s income squeezed by higher deposit and borrowing costs, investors soured on its stock, prompting executives to make their case to Wall street analysts.

JPMorgan Chase & Co. analysts hosted a webinar last November with Beck, SVB’s chief financial officer, who addressed investor concerns over nearly two hours, according to a research note the bank sent to clients. The analysts concluded that the downturn in deposits was manageable and SVB had ample liquidity without having to sell securities at a loss “even if a worst case scenario plays out.” As late as January, JPMorgan forecast a turnaround for SVB and recommended clients buy the stock.

A week before the bank failed, in its annual report to shareholders, SVB praised its top executives for an area of achievement: managing risk.

Becker, the CEO, had displayed “strong leadership of the continued evolution of risk management.” Beck, the CFO, was credited for “promotion of a strong risk culture.”