U.S. Sen. Sherrod Brown (D-OH) speaks to members of the media outside a briefing on the latest development of the COVID-19 outbreak to Senate members at Dirksen Senate Office Building March 12, 2020 on Capitol Hill in Washington, DC.
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WASHINGTON — Bipartisan leaders of a Senate committee investigating the failures of Silicon Valley Bank and Signature Bank called Thursday for both institutions’ former CEOs to testify about the collapses that have sparked fears about broader economic damage.
Ex-SVB CEO Gregory Becker and former Signature CEO Joseph DePaolo “must answer for” their banks’ “downfall,” wrote Sens. Sherrod Brown, D-Ohio, and Tim Scott, R-S.C., in letters to the former executives. Brown and Scott are the chairman and ranking member, respectively, of the Senate Banking, Housing and Urban Affairs Committee.
Both Becker and DePaolo indicated they were unable to attend a March 28 Banking Committee hearing on the companies’ failure, according to the letters. Brown and Scott urged the two former executives to answer the panel’s questions “at a future date.”
Spokespeople for SVB and Signature did not immediately respond to requests to comment.
Federal Deposit Insurance Corp. Chairman Martin Gruenberg, Federal Reserve Vice Chair for Supervision Michael Barr and Treasury Undersecretary for Domestic Finance Nellie Liang are scheduled to testify at the Senate hearing. Barr is leading the Fed’s internal review of the bank failures.
In their letter to Becker, Brown and Scott said they sought information on SVB’s alleged negligent business practices, including the “overwhelming” proportion of uninsured depositors shortly before the FDIC closed the bank earlier this month.
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“As the CEO of SVB at the time of its collapse, your testimony on the bank’s corporate governance, risk management, rapid growth, and client industry and sector concentration, as well as the overwhelming proportion of uninsured depositors and the payment of bonuses in the hours leading up to the seizure of the bank by regulators, would address several important matters the Committee needs to understand,” the senators wrote.
Before it collapsed, 94% of SVB’s deposits sat above the FDIC’s $250,000 insurance limit. The senators also asked DePaolo to explain Signature’s “outsized proportion of uninsured depositors” along with its “corporate governance, risk management, rapid growth (and) business mix.”
Testimony could be provided without disclosing confidential supervisory information, bank records or files, Brown and Scott wrote.