SVB collapse: Warren demands accountability from Silicon Valley Bank CEO

Sen. Elizabeth Warren (D-MA), demands accountability and answers Silicon Valley Bank Greg Becker, CEO, on the company’s efforts in rolling back financial Regulations prior to the bank’s collapse.

Silicon Valley Bank collapsed After stocks started plummeting, venture capital firms advised clients and companies to withdraw their money from the bank on March 10. This led to $42 billion being withdrawn in one day. On March 9, the bank had a negative cash balance of $958 million and its stock prices had dropped by about 60%.

SVB COLLAPSE: HERE IS EVERYTHING THAT YOU NEED TO KNOW

Warren is not alone in blaming the Trump administration’s roll-back policies under the Dodd-Frank Act. The Economic Growth, Regulatory Relief and Consumer Protection Act was passed by the Senate. 2020 also saw an increase in the threshold at what bank can be considered. “systemically important” Warren claimed that Silicon Valley Bank was exempted by regular stress testing and risk management plans, which could have prevented the bank’s collapse.

“You lobbied for weaker rules, got what you wanted, and used this opportunity to abdicate your basic responsibilities to your clients and the public — facilitating a near-economic disaster,” Warren wrote to Becker.

“There is much work to be done to understand the failure of SVB — and these efforts must start with understanding your role in the rollback of banking regulations that facilitated this failure,” She went on.

Massachusetts senator claims that Becker was involved with bank executives. “intense lobbying” to reverse the measures, and that the CEO stated in 2015 that the bank “does not present systemic risks.” The bank’s failure however brought attention to the $620 billion potential hole in the banking sector.

“Despite your assurances to Congress that SVB was sufficiently protected from risk because of your various efforts, it is now clear that SVB was wholly unequipped to independently assess its business’s risk,” Warren wrote. “SVB failed — while its Chief Risk Officer position sat vacant for eight months as its financial standing deteriorated — because it failed to address two key risks: concentration in your client base, and rising interest rates.”

Warren asked eight questions of the CEO, which covered everything from attempts to reverse policies to the amount of bonuses that have been received or given out in the past 10 years. Becker must respond by March 28, she has been asked.

“You have nobody to blame for the failure at your bank but yourself and your fellow executives,” Warren wrote.

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Monday’s announcement by the Federal Reserve that it was launching a review of Silicon Valley Bank’s supervision and regulation, came after the Federal Reserve had announced its intention to do so. The Justice Department and Securities and Exchange Commission launched their own investigations into Tuesday’s collapse of the bank.

The Federal Reserve’s March 22 decision on interest rate increases is likely to be impacted by the bank’s collapse.