Today the Senate Banking Committee is holding a hearing on the failure of several banks that helped to drive fear and concern within the entire banking system. The hearing includes the testimony of Gregory Becker, former CEO of Silicon Valley Bank; Scott A. Shay, former Chairman and co-founder of Signature Bank; and Eric R. Howell, former President of Signature Bank.
Tomorrow, the House Financial Services Committee will hold a hearing that will add Michael Roffler, former CEO of First RepublicBank (and remove Howell) which should include significant overlap.
Several federal agencies have published reports on the cause of the bank failures that led to emergency actions by the US government to backstop all loans to halt possible contagion. The consensus is that very poor bank risk management was the main cause as long-term assets sank in value due to rising interest rates – to the point that deposits were not covered in the immediate term. At the same time, bank regulators failed to ring the warning bell that calamity was on the way. Bank regulators possess enormous power and see just about everything regarding a bank’s balance sheet.
Another factor in the failures was the tech-enhanced run on the bank as customers pulled money from the banks using mobile and digital apps at a rapid pace.
Questioning by Congress will be blistering. For example, Senator John Kennedy of Louisiana displayed a rather embarrassing video created by Signature Bank that management must certainly regret in hindsight.
Testimony from the Senate Banking hearing is available below.
Gregory Becker – Silicon Valley Bank
