Former Silicon Valley Bank CEO Greg Becker plans to blame the “unprecedented” deposit run for the bank’s collapse on “rumors and misunderstandings.”
In his first public appearance since the March 10 collapse of SVB sparked the worst banking turmoil since the 2008 crisis, Becker is expected to say that no bank “could survive a bank run of this speed and scale.” “.
According to pre-written testimony before the Senate Banking Committee on Tuesday before his cross-examination, Baker said he was “shocked” by the collapse of SVB — now the third-largest U.S. bank to fail — “really shocked.” Sorry” for employees, customers and investors.
In comments likely to unsettle Goldman, Becker noted that SVB had decided to sell most of its securities at a loss on the advice of Wall Street groups, a move that spooked investors and savers.
The ensuing bank run prompted the FDIC regulator to seize control of the bank. Goldman Sachs did not immediately respond to a request for comment.
“I never imagined that these unprecedented events would happen to SVB, and I firmly believe that the leadership team and I made the best decisions we could based on the facts, projections and outside expert advice available at the time,” Becker wrote road. SVB 12 years.
The former SVB president also appeared to place some of the blame on the Fed and its mistaken forecast that the rise in inflation starting in 2020 would be “transitory”. Becker argues that because of this “messaging,” SVB and other banks “invest in their portfolios of securities.”
Meanwhile, Becker took issue with an article published in the Financial Times in February that said SVB, along with another lender called Silvergate, was under fire for its decision to move assets into a portfolio of securities. review. Silvergate decided to close on March 8, two days before SVB closed.
“Silvergate’s failure and connection to SVB caused rumors and misconceptions to spread rapidly online, leading to the start of an unprecedented bank run,” Becker wrote.
He added: “The next day, the bank run accelerated. By the close of trading on March 9, SVB had withdrawn $42 billion in deposits in 10 hours, or about $1 million per second.”
The next day, the FDIC took over SVB, triggering another $100 billion in deposit withdrawals. That meant 80% of deposits disappeared in just two days, the fastest bank run in U.S. history.
In a Fed report late last month, the U.S. central bank blamed mismanagement by Baker and other top executives for SVB’s failure, as well as regulatory reforms under Donald Trump and the failure of Fed regulators to quickly address issues in their After being discovered.
Former Signature Bank executives seized by regulators along with SVB are scheduled to appear at the same hearing as Becker on Tuesday.
Former Signature Chairman Scott Shay plans to tell lawmakers the FDIC was wrong to take over the lender, according to pre-written testimony.
“The bank has a clear and solid plan to continue operating and withstand additional withdrawals,” Shay wrote. “While I think the bank is well-positioned to weather the storm, regulators clearly see it differently.”
The grilling of SVB and Signature executives will kick off a day of soul-searching in Washington on the causes of the bank failures, which have shaken confidence in regional U.S. banks and which the Federal Reserve has blamed for a credit crunch.
Regulators including Federal Reserve Vice Chairman Michael Barr and FDIC Chairman Martin Grunberg will testify about the failed banks at a separate hearing before the House Financial Services Committee.
Becker’s testimony also addressed criticism of his compensation, including disclosures showing he sold $3.6 million worth of SVB stock shortly before the bank’s collapse. He said he was “very big believer” in SVB stock and that his stake was nearly five times larger than the board requested.
The stock sale in February was sparked by SVB’s fourth-quarter results, he said. “I did nothing to expedite that transaction and only learned in hindsight that it was executed.”
SVB’s market cap, which peaked at $44 billion in 2021 at the height of the pandemic-fueled tech boom, fell to about $17 billion in February amid fears of a downturn in the venture capital industry, its core client base.
Reporting by Antoine Gara, Stephen Gandel, Brooke Masters and Josh Franklin in New York, Colby Smith in Washington and Tabby Kinder in San Francisco