A sign is posted in front of the Silicon Valley Bank (SVB) headquarters on 10 March 2023 in Santa Clara, California/AFP.

NEW YORK, UNITED STATES — Executives from two failed US banks faced tough questioning Tuesday as senators railed against the lenders’ risk management practices and lofty executive pay.

The hearing featured the first significant public appearance of former Silicon Valley Bank chief executive Gregory Becker, who characterized the bank as well-managed and essentially blamed the firm’s speedy March demise on factors beyond his control.

But the failure of both SVB and Signature Bank — which also had former executives on the witness stand — has been blamed in government reports on poor management, given the speedy growth of both lenders.

“You made a really stupid bet that went bad, didn’t it?” asked Louisiana Republican Senator John Kennedy in an exchange with Becker over a decision to end a program to manage interest rate risk as the Federal Reserve shifted policy.

“Senator, there were a series of events, unprecedented events that occurred that led us to where we are today,” Becker said.

Pressed later by Georgia Democrat Raphael Warnock if he should have done anything differently, Becker said he and other executives “made the best decisions they could have” given the information at the time.

Asked repeatedly about his compensation — which totalled US$40 million in the last four years — Becker said that decision rested with the bank’s board.

“That’s determined by the board of directors, and so I know they believed it was fair, and I believe that they were accurate,” he said.

In his written statement ahead of the hearing, Becker attributed SVB’s demise to a “social media-fueled” bank run based partly on rumour, while also citing the effect of the Fed’s abrupt shift in monetary policy.

But multiple senators ripped Becker and his counterparts at Signature for not taking responsibility for key decisions, lambasting the executives for taking tens of millions of dollars in compensation in the years before the banks collapsed.

Noting that Becker successfully lobbied in 2018 for weakening banking rules, Massachusetts Democratic Senator Elizabeth Warren urged the passage of legislation to claw back pay from bankers like Becker and former Signature chairman Scott Shay.

“They can load up their banks with risk. They can pay themselves tens of millions of dollars in bonuses and stock options,” Warren said. “And when the banks blow up, Mr Becker and Mr Shea get to keep all the money, and that is just plain wrong.”

— AFP

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments
You May Also Like

Malaysia King names Anwar Ibrahim as Malaysia’s 10th Prime Minister, swearing-in to take place 5pm today

KUALA LUMPUR, MALAYSIA — The impasse of the hung parliament has finally…

France tells China to end mass detentions in Xinjiang

France on Wednesday called on China to end “mass arbitrary detentions” in…

Trump lawyer: Docs were de-classified or ‘mementos’

Donald Trump’s lawyer argued that his federal charges for mishandling secret documents are politically motivated. Trump faces 37 charges, including violations of the Espionage Act, but his lawyer claims he did nothing wrong and won’t admit guilt. Former Attorney General Bill Barr stated that if even half the indictment is true, Trump is in serious trouble. The charges carry up to 20 years in prison, and Trump’s defiance and support among Republicans highlight the country’s political polarization.