The Senate hearing on US bank failures took a heated turn as executives from two collapsed banks faced tough questioning regarding their risk management practices and excessive executive compensation. Former Silicon Valley Bank CEO, Gregory Becker, made his first significant public appearance and defended the bank's management while attributing the bank's downfall to external factors beyond his control.
The failures of both Silicon Valley Bank and Signature Bank have been attributed to poor management in government reports, considering the rapid growth of both institutions. Louisiana Republican Senator John Kennedy confronted Becker, accusing him of making a "stupid bet" that resulted in losses when the bank ended a program to manage interest rate risk in response to the Federal Reserve's policy shift.
Becker acknowledged a series of unprecedented events but maintained that the decisions made by the bank's executives were based on the available information at the time. When questioned about his compensation, totaling $40 million in the past four years, Becker deflected responsibility, stating that the board of directors determined his pay and believed it to be fair.
During the hearing, several senators criticized Becker and executives from Signature Bank for their lack of accountability and substantial compensation leading up to the banks' collapses. Massachusetts Democratic Senator Elizabeth Warren, noting Becker's lobbying efforts to weaken banking regulations in 2018, called for legislation to claw back pay from executives like Becker and former Signature chairman Scott Shay.
Warren argued that these executives could take excessive risks, earn millions of dollars in bonuses and stock options, and retain all the money even when the banks fail. The senators emphasized the need for accountability and fair compensation in the banking sector.
