Might 15 (Reuters) – Greg Becker, the previous chief government officer of Silicon Valley Financial institution, is ready to seem earlier than the U.S. Congress on Tuesday, two months after the collapse of his financial institution sparked panic amongst financial institution prospects and buyers, forcing the federal government to backstop deposits.
California banking regulators moved rapidly to close down Silicon Valley Financial institution on March 10 after depositors withdrew $42 billion in 24 hours. Only a day earlier, Becker had personally known as shoppers to guarantee them their cash was secure.
It was the third-largest financial institution failure in U.S. historical past. The SVB collapse set off shock waves that pounded regional banking shares for weeks.
Becker will testify earlier than the Senate Banking Committee alongside Scott Shay and Eric Howell, the previous chair and president, respectively, of Signature Financial institution. Regulators closed the lender on March 12 after it skilled liquidity points following SVB’s collapse two days earlier.
The hearings will for the primary time provide lawmakers the chance to grill the three executives who've been criticized for failing to deal with risk-management points that had been flagged by regulators.
Some lawmakers have additionally rebuked Becker for dispensing bonuses and have questioned whether or not he and different executives profited from inventory gross sales forward of the financial institution's collapse.
Becker couldn't be reached by cellphone for remark. Shay and Howell didn't reply to requests for remark.
In ready testimony revealed forward of Tuesday's listening to, Becker mentioned the Federal Reserve's rate of interest hikes in addition to panic on social media had been the downfall of his financial institution, and mentioned executives had been attentive to issues that had been raised by regulators. Shay and Howell in ready testimony mentioned they disagreed with regulators' selections to shut Signature and that the financial institution would have been in a position to course of withdrawal requests.
Federal regulators invoked emergency powers to backstop all deposits at SVB and Signature. They facilitated the sale of SVB to North Carolina-based First Residents Financial institution and the sale of Signature to Flagstar Financial institution, a subsidiary of New York Neighborhood Bancorp Inc (NYCB.N).
Regulators may also seem earlier than Congress on Tuesday at a separate Home of Representatives listening to the place lawmakers are anticipated to query their oversight of the lenders, how they dealt with the failures, and their determination earlier this month to dealer a sale of troubled First Republic Financial institution to JPMorgan.
‘THE HIGHEST OF HIGHS’
However Becker, who joined SVB three many years in the past as a mortgage officer, is probably going to attract essentially the most scrutiny.
He lower his enamel in the course of the dotcom bubble and later steered the startup-focused lender within the wake of the 2008 international monetary disaster. He turned president and CEO of SVB Monetary Group (SIVBQ.PK) in 2011. In January, Becker mentioned the financial outlook was bettering after a downbeat 2022.
“We're optimistic,” Becker told CNBC.
Becker graduated from Indiana College with a bachelor's diploma in enterprise, in keeping with a biography revealed on expertise reserving company All American Audio system Bureau's web site. From there, he labored at a financial institution that served what he known as “conventional firms.” When his supervisor left to work for Silicon Valley Financial institution, Becker adopted, he mentioned on a 2021 Bloomberg podcast.
The banker described his first few years at SVB as “the very best of highs and the bottom of lows” because the lender navigated the tech rout of the late Nineteen Nineties.
“We took losses. It was a difficult time for us … I look again on it fondly. I realized so much in regards to the establishment. I realized so much about find out how to lend cash,” he mentioned.
Earlier than turning into president and CEO of SVB Monetary Group, Becker co-founded SVB Capital, the corporate's funding arm.
He additionally served on the board of administrators on the Federal Reserve Financial institution of San Francisco from 2019 up till March 10, a spokesperson for the regional Fed financial institution mentioned.
Reporting by Hannah Lang in Washington; Enhancing by Lananh Nguyen, Michelle Worth and Matthew Lewis
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