WASHINGTON — Sen. Elizabeth Warren, D-Mass., who's likely to be a leading voice in congressional reforms to banking rules after the bail out of depositors in the collapse of Silicon Valley Bank and Signature Bank, criticized former Silicon Valley Bank CEO Greg Becker on his efforts to convince lawmakers to overturn some Dodd-Frank rules.
"These rules were designed to safeguard our banking system and economy from the negligence of bank executives like yourself — and their rollback, along with atrocious risk management policies at your bank, have been implicated as chief causes of its failure," Warren said.
Warren is one of several Democratic lawmakers who, since the failure of Silicon Valley Bank and Signature, alongside the extraordinary effort by financial regulators to backstop uninsured depositors, have
In 2015, Becker submitted a statement to the Senate Banking Committee, calling on Congress to reduce safety standards for midsized banks. Becker told lawmakers that the bank didn't pose any systemic risk, and that since the enactment of Dodd-Frank years earlier, Silicon Valley Bank had taken a number of steps to shore up its risk operations, including conducting a "range of different stress tests." Becker asked lawmakers to raise the threshold at which Dodd-Frank's enhanced prudential standards applied, which would make banks of Silicon Valley Bank's size at the time of its failure not subject to "living will" requirements.
"These assurances were questionable at the time you made them, and in the wake of SVB's failure, they now look nefarious," Warren said.
Warren also criticized Becker's $3.6 million sale of company stock just two days before Silicon Valley Bank's collapse, as well as, according to Warren, the bonuses paid to the bank's employees just hours before the Federal Deposit Insurance Corp. took control of the bank.
"While you and company executives appear to have been successful in cashing out before the crash, SVB's customers were not as lucky," Warren said. "Many depositors were unable to access their funds last week, leaving small businesses and nonprofits questioning how they were going to make payroll in time and leaving those businesses' workers wondering whether they would still have a job in the coming weeks. The consequences of SVB's failure triggered concerns about contagion spreading to other parts of the financial system — forcing the federal government to backstop depositors and protect the economy."
