The former Silicon Valley bank chief executive was unaware the lender was in trouble as he sold shares weeks before the failure, he told senators in his first public comments, defending his behavior after the lender’s shocking collapse.
California banking regulators shut down Silicon Valley Bank on March 10 after depositors withdrew $42 billion in 24 hours, sparking a global plunge in bank stocks and sparking investor fears of contagion to other banks.
Two other US regional lenders have since failed, marking the biggest turmoil for banks since the 2008 financial crisis.
In his comments, former SVB boss Greg Becker painted a picture of an unprecedented, unpredictable crisis that was spreading at lightning speed, despite the bank taking risk management seriously and having around $80 billion in liquidity at the end of last year.
“I think it was a series of unprecedented events that all came together in the fastest bank run in history,” Becker told the Senate Banking Committee.
Tuesday’s hearing was the first opportunity for lawmakers to confront Becker, who has been criticized for not addressing risk management issues reported by regulators. Some lawmakers have also rebuked Becker for paying out bonuses and questioned whether he and other executives profited from stock sales prior to the bank’s collapse.
Becker sold SVB shares in the first quarter, with the biggest turnover on Feb. 27, public records show.
“I was CEO of Silicon Valley Bank and I take responsibility for what ultimately happened,” Becker said.
However, lawmakers on both sides of the partisan divide were unimpressed.
“Why did you ignore the admonitions of the regulators?” said Senator Sherrod Brown, a Democrat, in his opening remarks.
“There’s a simple answer, the same answer we find for most major bank failures — because executives got richer.”
Responding to criticism that the bank had no chief risk officer in the months leading up to its collapse, Becker said he had been told by regulators to look for a more experienced executive for the position. He also said he would work with regulators when they review SVB executive pay.
SVB’s demise was triggered by holdings of long-dated government bonds falling in value as interest rates rose rapidly – a risk the bank had not hedged. The bank attempted to cover the loss by raising capital, but the announcement of the transaction sparked a run on the bank.
“Mr. Becker, you made a really stupid bet that went awry, didn’t you?” said Senator John Kennedy, a Republican. “And America’s taxpayers had to pay for your stupidity.”