When asked at a Senate hearing this week who was responsible for the failure of Silicon Valley Bank, the company’s former chief executive, Greg Becker, had a lot of ideas, and it was regulation that caused the bankruptcy. It blamed the authorities, the bank board and its own customers.
On Thursday, senior officials from the bank’s main regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, told members of the same Senate committee that some of Becker’s impressions of lawmakers were false. .
Conflicting congressional testimony could pose yet another problem for Mr. Becker, who is under investigation by federal criminal prosecutors for his handling of failed California financiers and the bank’s health. is also facing a shareholder lawsuit as another senior leader who misled investors about up to its failure.
Mr. Becker’s attorney, James N. Kramer, said Mr. Becker stands by his statements.
The regulator’s statement was part of hearings held by the Senate Banking Committee on the future of banking supervision in the wake of the failures of three regional banks this spring. The case follows Becker along with former executives at Signature Bank, a New York financial institution that went bankrupt shortly after Silicon Valley Bank and urged the federal government to take drastic steps to prevent a widespread panic in the banking system. It was two days after he showed up.
Senators asked regulators charged with overseeing Silicon Valley banks on Thursday about two exchanges Becker had with commissioners earlier in the week. In one article, Mr. Becker appeared to claim that he had fixed all but one of his bank problems long before it collapsed. In another article, he appears to say he was kicked out of the process of finding a buyer after Silicon Valley Bank collapsed.
In the first exchange on Tuesday, Sen. Tom Tillis, a Republican of North Carolina, asked Mr. Becker to explain how the bank has responded to issues raised by regulators in its risk-management practices. Mr. Tillis brought up a list of items the regulator called “hot spots” and asked Mr. Becker to explain how they were dealt with.
“We were proactive,” Becker said. “By mid-2010, my recollection is that most of these findings had already been corrected. So, from my perspective, the team has been very responsive to regulatory feedback.”
On Thursday, Senator Mike Rounds (North Dakota Republican) asked Fed Vice Chairman Michael Burr if the issue was really resolved. Barr said no.
Sen. John Tester, a Democrat from Montana, said in an exchange with Mr. Barr that Mr. Becker “told this committee that all issues were addressed.”
Cramer replied: Becker referred to the feedback he received from SVB’s internal team, and never intended to suggest that regulators had approved the matter for completion.
Also at issue was whether Becker was able to help find a buyer for the bankrupt bank. “We will make every effort to ensure that SVB’s customers and employees are protected to minimize any potential losses resulting from the FDIC’s acquisition of SVB,” Becker said in written testimony to the Commission. Or tried to eliminate it,” he said.
“This included seeking engagement with potential acquirers so that the financial burden associated with the FDIC acquisition would be minimized and SVB’s employees would be protected,” he said. I thought it might be,” he said.
On Tuesday, Tennessee Senator Bill Haggerty asked Mr. Becker whether federal officials allowed him to help find buyers for failed banks.
“I’ve made several offers to partner with potential buyers,” Becker told Haggerty.
“Did they consult with you? You said you offered, but did the FDIC consult with you?” Mr. Haggerty asked.
“They didn’t,” Becker replied.
On Thursday, Mr. Hagerty asked regulators if that was the case.
“I believe FDIC officials actually met with Mr. Becker on Saturday, but I understand that they went to get his opinion,” said FDIC Chairman Martin Gruenberg, adding that officials were “potential.” I had gotten his opinion on potential buyers,” he added. of the facility. ”
“Interesting,” replied Mr. Hagerty. “That’s the opposite of what he said.”
“He supports testimony that they didn’t consult him,” Kramer said.
The hearing comes a month after federal regulators released a report revealing the roots of problems at Silicon Valley banks and signature banks, and the perceived regulatory flaws that exacerbated those problems. It was conducted. Regulators said the banks were poorly managed and unprepared for the risks associated with rising interest rates, while the Federal Reserve and the FDIC were too slow to respond to the red flags.
Republicans on the committee called on regulators for answers, in some cases blaming the Trump administration’s bank deregulation for the recent turmoil.
Senator John Kennedy (Louisiana Republican) accused Barr of seeking more power to regulate banks after failing to protect the banking system.
Barr insisted he wasn’t seeking new powers and was, in fact, working to do a better job.
“I am not asking for any additional authority, authority or funding from this committee,” Barr said. “We intend to leverage our existing powers to strengthen oversight and regulation to make this type of event less likely in the future.”
