Tuesday, June 6, 2023

‘It’s been devastating’: Former executives of failed US banks deny liability in bankruptcy

Appearing before the US Senate Banking Committee on Tuesday, May 16, Greg Baker and Scott Shaye, respectively, withstood a barrage of bipartisan criticism of their pre-collapse actions.

Senator Bob Menendez of New Jersey asked former SVB CEO Greg Baker a specific question: “Mr. Baker, 11 days before your bank failed, did you know at the time that Silicon Valley Bank was in trouble?”

Without hesitation, the former executive replied: “No senator, I wasn’t. It was an unforeseen event” and explained that, from his point of view, what happened was “the fastest bank run in history”. That was the discrepancy.”

But the arguments between senators on either side of the room had little traction. Both Democrats and Republicans criticized him for making risky moves or ignoring obvious problems while accepting lucrative pay packages and bonuses that directly led to the failure of his banks.

Officials at Silicon Valley Bank and Signature Bank are accused of receiving millions of dollars, most of which were in stocks, which they allegedly sold before the banks collapsed.

One of the most defining moments of the debate was when Senator John Kennedy of Louisiana called the former CEO of Silicon Valley Bank an “idiot” and accused him of “putting all his eggs in one basket” and not taking appropriate measures at the time When interest rates were rising” in front of everyone’s eyes.

In turn, Elizabeth Warren, a Massachusetts senator, asked the managers in question whether they were prepared to return the money that the Deposit Guarantee Fund was supposed to hold: while Greg limited himself to answering that There will be a compensation review process, Shay replied with a pompous “No, I’m not going to.”

Finally, Senator Warren pointed out that current regulations allow cases like SVB to happen where, according to him, “CEOs lobby Washington to weaken financial regulation of their banks and end up when the banks explode.” They all live with the money.”

Nation World News Desk
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