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In the midst of a tense debate, the former presidents of Silicon Valley Bank (SVB) and Signature Bank publicly defended themselves against the accusations of their management in the fall of these entities and discharged their responsibility for the run on deposits from their clients.
Appearing before the US Senate Banking Committee on Tuesday, May 16, Greg Becker and Scott Shay, respectively, fended off a barrage of bipartisan criticism of their pre-collapse actions.
New Jersey Senator Bob Menendez posed a specific question to former SVB CEO Greg Becker: “Mr. Becker, 11 days before your bank failed, did you know at that time that Silicon Valley Bank was in trouble?”
Without hesitation, the former executive replied: “No senator, I wasn’t. It was an unforeseen event” and he explained that, from his point of view, what happened was “the fastest bank run in history. That was the anomaly.”
But the arguments had little traction among senators on either side of the room. Both Democrats and Republicans criticized them for taking risky steps or overlooking obvious problems that led directly to the failure of their banks, while continuing to accept lucrative pay packages and bonuses.
Silicon Valley Bank and Signature Bank executives are accused of receiving millions of dollars, most of it in shares, which they reportedly sold before the banks collapsed.
“Stupid!”: a claim that turned into an insult
One of the most critical moments of the debate was when Louisiana Senator John Kenedy called the former CEO of Silicon Valley Bank “stupid” and accused him of having put “all his eggs in one basket” and not taking the appropriate measures in times when interest rates were rising” in front of everyone’s eyes.
In turn, the senator from Massachusetts, Elizabeth Warren, asked the questioned managers if they were willing to return the money that the deposit guarantee fund had to assume: while Greg limited himself to responding that there would be a compensation review process Shay replied with a resounding “no, I’m not going to.”
In conclusion, Senator Warren pointed out that existing rules allow cases like the SVB to occur, where, according to her, “CEOs lobby Washington for their banks to weaken financial regulation and in the end when the banks explode they stay with all the money.”
With AP and Reuters
