"If we are to deter this kind of risky behavior from happening again, it's critical that those responsible not be rewarded."
The bank took a risk by heavily concentrating its assets in a single industry, and then by investing a large share of the funds into long-term Treasury bonds "that promised good returns when interest rates were low,"Reich at Substack on Monday. When interest rates rose, the value of the bonds fell and "the gusher of venture capital funding to startup and tech companies slowed, because venture funds had to pay more to borrow money.
The business model used by SVB executives including Becker "was great for SVB's short-term profits, which shot up by nearly 40% over the last three years," wrote Warren. But with regulators forced to take over SVB and then on Sunday—a New York-based institution also heavily tied to tech—to mitigate the damage done, she added, "now we know its cost."
"SVB and Signature shareholders will be wiped out, but their executives must also be held accountable," she added. "Mr. Becker of SVB took home $9.9 million in compensation last year, including a $1.5 million bonus for boosting bank profitability—and its riskiness. Joseph DePaolo of Signature
How about campaign donations?