SVB, Signature Bank execs slammed by Congress as they try to divert blame
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7 months ago
SIMONE DEL ROSARIO: UNPRECEDENTED RATE HIKES. A SOCIAL MEDIA DRIVEN BANK RUN. AND CONTAGION. THESE ARE THE EXTERNAL FORCES TOP BANK EXECUTIVES BLAMED FOR THE COLLAPSES OF SILICON VALLEY BANK AND SIGNATURE BANK. BUT SENATORS DIDN’T BUY IT.
SEN. ROBERT MENENDEZ: I hear you testify all collectively that you did everything right. Something happened because the banks failed.
SIMONE DEL ROSARIO: FOR THE FIRST TIME, FORMER LEADERS AT SVB AND SIGNATURE BANK SPOKE PUBLICLY ABOUT TWO OF THE LARGEST BANK FAILURES IN U-S HISTORY.
GREGORY BECKER, FORMER SILICON VALLEY BANK CEO: Rumors and misconceptions quickly spread online culminating on March 9 with the first-ever social media bank run, leading to $42 billion in deposits being withdrawn from SVB in 10 hours, or roughly $1 million every second.
SEN. SHERROD BROWN: Mr. Becker, your version of events blames SVB’s failure on too many interest rate hikes, a social media driven bank run, the closure of the much smaller Silvergate Bank and the regulators for being slow to highlight its long standing problems. It sounds a lot like the dog ate my homework.
SEN. JOHN KENNEDY: This was bone deep down to the marrow stupid. You put all your eggs in one basket. You put all your eggs in one basket. And unless unless you were living on the International Space Station, you could see that interest rates were rising and you weren’t hedged.
SIMONE DEL ROSARIO: SENATORS FROM BOTH PARTIES CITED GREED, A FAILURE TO HEDGE INTEREST RATE RISKS, AND IN THE CASE OF SVB, 31 RED FLAGS CITED BY REGULATORS THEY SAY THE BANK IGNORED.
SEN. TIM SCOTT: Three times the average number, that’s 31 notices that you received flashing red lights that something was desperately wrong. But let me say this, SVB was an anomaly and your lack of judgment, Mr. Becker, shows that you should not have been running the bank.
SIMONE DEL ROSARIO: WELL, REGULATORS TOOK OVER SIGNATURE BANK TWO DAYS AFTER SVB COLLAPSED, BUT ITS CHAIRMAN INSISTED THE BANK COULD HAVE SURVIVED.
SCOTT SHAY, FORMER CHAIRMAN & CO-FOUNDER OF SIGNATURE BANK: I believe that Signature Bank was a responsibly managed bank, solvent until the end.
SEN. ELIZABETH WARREN: Yeah, well, I’m sorry, your opinion on what is responsible is now laughable. So you’re planning to return to how much?
SCOTT SHAY: The answer is…
SEN. ELIZABETH WARREN: None. That’s it?
SCOTT SHAY: I’m not planning to do so. No.
SIMONE DEL ROSARIO: SENATOR WARREN CONTINUED HER CLAWBACK CRUSADE WITH GREG BECKER FROM SVB. FOLLOWING THE BANK COLLAPSE, WARREN PROPOSED BIPARTISAN LEGISLATION THAT WOULD CLAW BACK THE COMPENSATION OF FAILED BANK EXECUTIVES.
SEN. ELIZABETH WARREN: How much of the $40 million are you planning to return? How many times are we gonna do this dance?
GREG BECKER: Senator I promise to cooperate with the regulators as they do…
SEN. ELIZABETH WARREN: Are you planning to return a single nickel to what you cost the fund?
GREG BECKER: Senator, I know there’s going to be a process review of compensation.
SEN. ELIZABETH WARREN: I’ll take no.
SIMONE DEL ROSARIO: BANK EXECUTIVES AREN’T THE ONLY ONES IN THE HOT SEAT THIS WEEK. REGULATORS FROM THE FED AND FDIC ARE BACK THURSDAY TO ANSWER WHERE THEY MAY HAVE DROPPED THE BALL ON BANKS RED FLAGS.
I’M SIMONE DEL ROSARIO, IN NEW YORK IT’S JUST BUSINESS.