When requested in a Senate listening to this week who was guilty for the demise of Silicon Valley Bank, the lender’s former chief govt, Greg Becker, had loads of concepts, blaming regulators, the financial institution’s board and its personal clients for bringing it down.
On Thursday, senior officers from two of the financial institution’s fundamental regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, instructed members of the identical Senate panel that a number of the impressions Mr. Becker had left lawmakers with had been false.
The contradictory congressional testimony threatened to pose yet one more downside for Mr. Becker, who’s dealing with an investigation by federal felony prosecutors into his dealing with of the failed California lender in addition to a shareholder lawsuit accusing him and one other senior chief of deceptive buyers in regards to the financial institution’s well being within the lead-up to its failure.
James N. Kramer, a lawyer for Mr. Becker, mentioned Mr. Becker stood by the statements he had made.
The regulators’ statements had been a part of a listening to held by the Senate Banking Committee on how financial institution oversight ought to look sooner or later in mild of the failures of three regional banks this spring. It got here two days after Mr. Becker appeared alongside former senior leaders of Signature Bank, a New York lender that collapsed simply after Silicon Valley Bank did and prompted the federal authorities to take drastic steps to forestall widespread panic within the banking system.
Senators on Thursday requested the regulators in control of overseeing Silicon Valley Bank about two exchanges Mr. Becker had with committee members earlier within the week. In one, Mr. Becker appeared to assert his financial institution had fastened all however certainly one of its issues nicely earlier than it failed. In the opposite, he appeared to say that he had been shut out of the method of discovering a purchaser for Silicon Valley Bank after it had failed.
During the primary alternate on Tuesday, Senator Thom Tillis, Republican of North Carolina, requested Mr. Becker to explain how his financial institution had responded to issues regulators had flagged in its danger administration practices. Mr. Tillis introduced up a listing of things regulators known as “matters requiring attention” and requested Mr. Becker to explain how they had been dealt with.
“We were working on them aggressively,” Mr. Becker mentioned. “To my memory, by the middle of ’22, the vast majority of those findings had already been remediated. And, I believe, even in early ’23 my recollection is there was roughly one of those findings that were outstanding so the team again from my standpoint was very responsive to the regulatory feedback.”
On Thursday, Senator Mike Rounds, Republican of North Dakota, requested the Fed’s vice chair for supervision, Michael Barr, whether or not the issues actually had been fastened. Mr. Barr mentioned that they’d not.
Mr. Becker “told this committee that they took care of all the problems,” Senator Jon Tester, Democrat of Montana, mentioned in an alternate with Mr. Barr.
To that, Mr. Kramer responded, “Mr. Becker was referring to feedback he received from the internal team at SVB” and had by no means meant to recommend that regulators had signed off on the completion of the issues.
Also at concern was whether or not Mr. Becker had been capable of assist discover a purchaser for his failed financial institution. In his written testimony to the committee, Mr. Becker mentioned he had “made every effort to ensure that SVB’s customers and employees would be protected, and worked to minimize, or eliminate, any loses that might result from the F.D.I.C.’s takeover of SVB.”
“This included seeking to engage potential acquirers, which I believed may have minimized the financial burden of the F.D.I.C.’s takeover and would have protected SVB’s employees,” he mentioned.
On Tuesday, Senator Bill Hagerty, Republican of Tennessee, requested Mr. Becker whether or not federal authorities had let him assist discover a purchaser for the failed financial institution.
“I offered several times to engage potential acquirers,” Mr. Becker instructed Mr. Hagerty.
“Did they ever consult you? You said you offered, but did the F.D.I.C. consult with you?” Mr. Hagerty requested.
“They did not,” Mr. Becker replied.
On Thursday, Mr. Hagerty requested regulators whether or not that was true.
“It’s my understanding that F.D.I.C. staff actually did meet with Mr. Becker on I believe it was the Saturday to get input from him,” mentioned chairman of the F.D.I.C., Martin Gruenberg, who added that employees members “got input from him on potential acquirers of the institution.”
“Interesting,” Mr. Hagerty replied. “That’s contrary to what he said.”
“He stands by his testimony that they did not consult with him,” Mr. Kramer mentioned.
The listening to got here a month after federal regulators launched reviews that laid out the roots of the issues at Silicon Valley Bank and Signature Bank and the acknowledged regulatory lapses that allowed these issues to fester. The regulators mentioned that each banks had been poorly managed and had been unprepared for the dangers related to rising rates of interest, however famous the Federal Reserve and the F.D.I.C. had been too sluggish in responding to pink flags.
Republicans on the committee pushed the regulators for solutions and in some circumstances accused them of blaming the Trump administration’s loosening of financial institution rules for inflicting the current turmoil.
Senator John Kennedy, Republican of Louisiana, accused Mr. Barr for looking for extra authority to manage banks after failing to efficiently safeguard the banking system.
Mr. Barr insisted that he was looking for no new powers and, actually, was committing to doing a greater job.
“I am not seeking any additional authority or power or money from this committee,” Mr. Barr mentioned. “We are going to use our existing authority to strengthen supervision and regulation to make it less likely that this kind of event happens in the future.”
Source: www.nytimes.com