U.S. Sen. Sherrod Brown (D-OH) speaks to members of the media outside a briefing on the most recent development of the COVID-19 outbreak to Senate members at Dirksen Senate Office Constructing March 12, 2020 on Capitol Hill in Washington, DC.
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WASHINGTON — Bipartisan leaders of a Senate committee investigating the failures of Silicon Valley Bank and Signature Bank called Thursday for each institutions’ former CEOs to testify in regards to the collapses which have sparked fears about broader economic damage.
Ex-SVB CEO Gregory Becker and former Signature CEO Joseph DePaolo “must answer for” their banks’ “downfall,” wrote Sens. Sherrod Brown, D-Ohio, and Tim Scott, R-S.C., in letters to the previous executives. Brown and Scott are the chairman and rating member, respectively, of the Senate Banking, Housing and Urban Affairs Committee.
Each Becker and DePaolo indicated they were unable to attend a March 28 Banking Committee hearing on the businesses’ failure, in line with the letters. Brown and Scott urged the 2 former executives to reply the panel’s questions “at a future date.”
Spokespeople for SVB and Signature didn’t immediately reply to requests to comment.
Federal Deposit Insurance Corp. Chairman Martin Gruenberg, Federal Reserve Vice Chair for Supervision Michael Barr and Treasury Undersecretary for Domestic Finance Nellie Liang are scheduled to testify on the Senate hearing. Barr is leading the Fed’s internal review of the bank failures.
Of their letter to Becker, Brown and Scott said they sought information on SVB’s alleged negligent business practices, including the “overwhelming” proportion of uninsured depositors shortly before the FDIC closed the bank earlier this month.
“Because the CEO of SVB on the time of its collapse, your testimony on the bank’s corporate governance, risk management, rapid growth, and client industry and sector concentration, in addition to the overwhelming proportion of uninsured depositors and the payment of bonuses within the hours leading as much as the seizure of the bank by regulators, would address several necessary matters the Committee needs to know,” the senators wrote.
Before it collapsed, 94% of SVB’s deposits sat above the FDIC’s $250,000 insurance limit. The senators also asked DePaolo to elucidate Signature’s “outsized proportion of uninsured depositors” together with its “corporate governance, risk management, rapid growth (and) business mix.”
Testimony could possibly be provided without disclosing confidential supervisory information, bank records or files, Brown and Scott wrote.
