NEW YORK — Top executives at Silicon Valley Bank and Signature Bank largely avoided taking responsibility for their banks’ dramatic failures at a Senate hearing Tuesday, instead using their time to assign blame to events they said were largely out of their control.
More than a handful of senators asked if the executives would consider returning part of their compensation, since bank failures are shouldered by the Federal Deposit Insurance Corporation and other banks in the system. Each of the three executives testifying demurred. “You say you took risk management seriously. I find it hard to believe that comment,” said Sen. Tim Scott, the ranking Republican on the committee.A number of senators faulted the executives for failing to guard against the impact of rising interest rates. The Federal Reserve rapidly increased rates starting in March of last year, which reduced the value of large loans the bank issued as well as Treasury bonds the bank bought when rates were much lower.
Senators also used the hearing to address executive pay and whether senior executives in the U.S. are being rewarded more for short-term gains — like rising stock prices — than for ensuring their companies’ long-term health. Sen. Elizabeth Warren, D-Massachusetts, asked both Becker and Shay if they would forfeit any of their compensation to the Federal Deposit Insurance Corp., which covered their banks’ deposits after they failed.Warren called their response “just plain wrong,” adding “if we don’t fix it, every CEO for these multibillion dollar banks will keep right on loading up on risks and blowing up banks and everybody else is going to have to pay for it.
But executives also have a lot to gain if they can sell their stock before the share price takes a steep dive. In his testimony, Becker said his stock sale in February was was a planned sale.