The former chief executive of Silicon Valley Bank plans to apologize before a Senate committee Tuesday, writing in prepared testimony that he believes no bank could have survived the run that gutted SVB in early March.
“I never envisioned myself or SVB being in this situation,” former CEO Greg Becker writes, adding that he is “truly sorry for how this has impacted SVB’s employees, clients, and shareholders.”
Becker is scheduled to testify at 10 a.m. ET Tuesday alongside two former executives of Signature Bank, which collapsed two days after SVB. Regulators were forced to take over both lenders after depositors rushed to withdraw their funds at once.
To stem contagion, the US government intervened to backstop deposits and extend credit to banks.
But SVB’s collapse rumbled across global financial markets and sparked a selloff that has gripped US regional banks for more than two months. Weeks after SVB and Signature fell into receivership, another lender, First Republic, collapsed on May 1 and was quickly sold off to JPMorgan Chase
(JPM). The three failures are among the top four biggest bank failures in US history, topped only by the collapse of Washington Mutual in 2008.
Becker’s prepared remarks offer a defense of his leadership team’s efforts to manage risk and calm panicked depositors when rumors about the bank’s financial positioning began spreading among SVB’s tight-knit, wealthy clientele.
He says inaccurate comparisons to Silvergate, a crypto lender that announced its liquidation days before SVB failed, helped fuel “an unprecedented bank run.”
“By the end of the day on March 9, $42 billion in deposits were withdrawn from SVB in 10 hours, or roughly $1 million every second,” Becker writes.
“I do not believe that any bank could survive a bank run of that velocity and magnitude, which was ‘far beyond historical precedents,’” he writes, quoting a Federal Reserve report about the fall of SVB.
Lawmakers are preparing to grill Becker, who was fired two days after regulators took over SVB, over the missed red flags that experts say contributed to the bank’s failure.
In its autopsy of the bank’s collapse, the Fed, which was SVB’s primary regulator, blamed both the central bank’s supervisory shortcomings and SVB management’s missteps.
Becker himself has come under fire from progressives including Sen. Elizabeth Warren (D-MA) for lobbying Congress to weaken regulations on large regional banks. “You have nobody to blame for the failure at your bank but yourself and your fellow executives,” Warren wrote in a letter to Becker in March.
“You lobbied for weaker rules, got what you wanted, and used this opportunity to abdicate your basic responsibilities to your clients and the public,” she wrote, “facilitating a near-economic disaster.”
Read the full article here