March 27, 2023: Bipartisan leaders of a Senate committee to search the decrease of Silicon Valley Bank and Signature Bank called on Thursday for both institutions’ retired CEOs to testify regarding the collapses that have sparked fears regarding broader economic damage.
Ex-SVB CEO Gregory Becker and retired Signature CEO Joseph DePaolo “must reply for” their banks’ “downfall,” noted Sens. Sherrod Brown, D-Ohio, and Tim Scott, R-S.C., in letters to the retired executives. The chairman and ranking members, respectively, of the Senate Banking, Housing and Urban Affairs Committee.
According to the letters, both Becker and DePaolo indicated they could not attend a March 28 Banking Committee hearing on the companies’ failure. Brown and Scott urged the two ex-executives to answer the panel’s questions “at a coming date.”
Federal Deposit Insurance Corp. Chairman Martin Gruenberg, Federal Reserve Vice Chair for Supervision Michael Barr and Treasury Undersecretary for Domestic Finance Nellie Liang are decided to testify at the Senate hearing. Barr leads the Fed’s internal statement of the bank failures.
In their note to Becker, Brown and Scott stated that they sought information on SVB’s alleged negligent business practices, including the “overwhelming” quantity of uninsured depositors shortly before the FDIC shuttered the bank.
“As the CEO of SVB at the time of its decreasing, your testimony on the bank’s corporate governance, managing threats, rapid developments, and client industry and sector attention, and the overwhelming proportion of uninsured depositors and the pay of bonuses in the hours leading up seizing of the bank by regulators, would stay several important matters the Committee requires to understand,” the senators wrote.
Before it decreased, 94% of SVB’s deposits exceeded the FDIC’s $250,000 insurance limit. The senators questioned DePaolo to explain Signature’s “outsized quantity of uninsured depositors” and its “corporate governance, risk control, rapid development business mix.”
Brown and Scott wrote that testimony could be provided without disclosing confidential supervisory, bank records or files.