Asked at a Senate hearing this week who was to blame for the demise of Silicon Valley Bank, the lender’s former chief executive, Greg Becker, had many ideas, blaming regulators, the bank’s board and its own employees. customer lowering it.
On Thursday, senior officials from two of the bank’s main regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, told members of the same Senate panel that some of the impressions Mr. Becker left on legislators are not true.
The conflicting congressional testimony threatened to cause another problem for Mr. Becker, who faces an investigation by federal criminal prosecutors into his handling of the failed California lender as well as a shareholder lawsuit accusing him and another senior executive of misleading investors about the bank health leading to its failure.
James N. Kramer, a lawyer for Mr. Becker, said Mr. Becker stood by the statements he made.
The regulators’ remarks were part of a hearing held by the Senate Banking Committee on what the future of bank supervision might look like in light of the failures of three regional banks this spring. It came two days after Mr. Becker along with former senior executives of Signature Bank, a New York lender that collapsed just after Silicon Valley Bank did and prompted the federal government to take drastic measures to prevent a widespread panic in the banking system .
Senators on Thursday questioned the regulators who oversee Silicon Valley Bank about two exchanges Mr. Becker had with committee members earlier in the week. In one, Mr. Becker seemed to say that his bank had fixed all but one of its problems before it failed. On the other hand, he appears to have said that he was shut out of the process of finding a buyer for Silicon Valley Bank after it failed.
In the first exchange on Tuesday, Senator Thom Tillis, Republican of North Carolina, asked Mr. Becker to describe how his bank responded to problems flagged by regulators in its risk management practices. Mr. came out. Tillis made a list of things that regulators identified as “things that need attention” and asked Mr. Becker to describe how they are administered.
“We are working with them aggressively,” Mr. Becker said. “To my memory, by the middle of ’22, most of those findings had been settled. And, I believe, even in early ’23 my recollection was that there was about one of those findings that stood out so the team again from my perspective is very responsive to regulatory feedback.
On Thursday, Senator Mike Rounds, Republican of North Dakota, asked the Fed’s vice chair for administration, Michael Barr, whether the problems had really been fixed. Mr. Barr said they had not.
“Mr. Becker told this committee that they took care of all the problems,” said Senator Jon Tester, Democrat of Montana, in an exchange with Mr. Barr.
Here, answered Mr. Kramer, “Mr. Becker was referring to the feedback he received from the internal team at SVB” and never meant to suggest that regulators had signed off on completing matters.
What is also being discussed is whether Mr. Becker in search of a buyer for his failed bank. In his written testimony to the committee, Mr. Becker said he “has made every effort to ensure that SVB’s customers and employees are protected, and to work to minimize, or eliminate, any losses that may result from on the FDIC’s acquisition of SVB.”
“This includes seeking to engage with potential acquirers, which I believe could have minimized the financial burden of the FDIC acquisition and would have protected SVB’s employees,” he said.
On Tuesday, Senator Bill Hagerty, Republican of Tennessee, asked Mr. Becker if federal authorities allowed him to help find a buyer for the failed bank.
“I have offered several times to contact potential acquirers,” Mr. Becker to Mr. Hagerty.
“Have they consulted you? You said you made an offer, but did the FDIC consult with you?” Mr. Hagerty asked.
“They didn’t do it,” answered Mr. Becker.
On Thursday, Mr. Hagerty asked regulators if that was true.
“I understand that FDIC staff actually met with Mr. Becker on I believe Saturday to get input from him,” said FDIC chairman Martin Gruenberg, adding that staff members “got input from him about potential acquirers. of the institution.”
“Interesting,” answered Mr. Hagerty. “That’s contrary to what he said.”
“He stands by his testimony that they did not consult him,” said Mr. Kramer.
The hearing came a month after federal regulators released reports that laid out the roots of the problems at Silicon Valley Bank and Signature Bank and the acknowledged regulatory lapses that allowed those problems to fester. Regulators said both banks were poorly managed and unprepared for the risks associated with rising interest rates, but noted that the Federal Reserve and the FDIC were too slow to respond to red flags.
Republicans on the committee pressed regulators for answers and in some cases accused them of blaming the Trump administration’s loosening of bank regulations for causing the recent turmoil.
Senator John Kennedy, Republican of Louisiana, accused Mr. Barr for demanding more authority to supervise banks after failing to protect the banking system.
Mr. insisted Barr that he is not looking for new powers and, in fact, is committed to doing a better job.
“I’m not looking for any additional authority or power or money from this committee,” Mr. Barr said. “We will use our existing authority to strengthen oversight and regulation to make it less likely that this type of event will occur in the future.”
