Bank CEOs questioned by senators

On May 16, the bosses of Silicon Valley Bank (SVB) and Signature Bank faced questioning from members of the US Senate banking committee. This marked their first public appearances following the government’s intervention to safeguard bank depositors’ funds after the banks’ collapse. Former CEO of SVB, Greg Becker, and co-founder of Signature Bank, Scott Shay, along with President Eric Howell, strongly denied responsibility for the failures, attributing them to external factors beyond their control, such as a social media-driven bank run and aggressive interest rate hikes by the Federal Reserve.

During the hearing, Senator Tim Scott expressed disbelief at the executives’ claims and questioned their risk management practices. Senator Elizabeth Warren and other lawmakers repeatedly asked whether the executives would consider returning their multimillion-dollar pay to the Federal Deposit Insurance Corporation (FDIC), which is expected to suffer a $23 billion loss due to the failures of SVB and Signature Bank. Warren shared a video of her exchange with the bank bosses on her YouTube channel.

However, none of the bankers accepted the suggestion to return their pay. Greg Becker, who reportedly earned $10 million in 2022, declined to comment on voluntarily repaying the money and instead pledged to cooperate with regulators. Scott Shay admitted that he had no plans to return any of his pay to the FDIC. The senators expressed their dissatisfaction with the executives’ responses.

Currently, existing legislation requires the FDIC to maintain 1.35% of all insured deposits in its deposit insurance fund (DIF), equivalent to $128 billion. To cover the losses from SVB and Signature Bank and replenish the DIF, the banking regulator can only increase assessment fees collected from larger banks. Senator Warren is actively working to change this situation and has led bipartisan efforts to introduce the Failed Bank Executives Clawback Act. This legislation would empower the FDIC to reclaim any pay received by bank executives in the five years leading up to the collapse of the banks.