People walk by a Manhattan branch of Signature Bank which was closed by bank regulators on Sunday on March 13, 2023 in New York City.
Spencer Platt | Getty Images
WASHINGTON — Former top executives of failed Silicon Valley Bank and Signature Bank will testify before the Senate on May 16, the chamber’s banking committee announced late Wednesday.
Greg Becker was chief executive of California-based SVB at the time of its March 10 collapse. Scott Shay and Eric Howell were the chairman and president, respectively, of New York-based Signature Bank when it collapsed just days after SVB’s failure.
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The hearing will mark the first time that any of the men has spoken in public about the bank failures that rocked U.S. financial markets. News that the executives would testify came after Becker declined a previous invitation to appear at a March 28 committee hearing.
“You must answer for the bank’s downfall,” committee Chairman Sen. Sherrod Brown, D-Ohio, and ranking member Sen. Tim Scott, R-S.C., wrote in their March 23 letter to Becker.
Former Signature Bank CEO Joseph DePaolo received a similar letter at the time. DePaolo is not expected to testify next week.
The former bank executives can expect a grilling from senators on both sides of the aisle.
In the nearly two months since the banks collapsed, CNBC has reported on stock sales by four top executives at SVB in the weeks and months ahead of the bank’s collapse. Senators have followed up, and asked Securities and Exchange Commission Chairman Gary Gensler to investigate the sales.
Greg Becker, President and CEO of Silicon Valley Bank (SVB), speaks during the Milken Institute Global Conference on May 3, 2022 in Beverly Hills, California.
Patrick T. Fallon | AFP | Getty Images
Tough questions have also been raised about why Becker and other executives at SVB were paid their annual bonuses just hours before the federal government took over the bank.
Becker can also expect to face questions about why Silicon Valley Bank ignored repeated warnings from regulators that the bank would face a risk of collapse if interest rates rose quickly — which they did as the Federal Reserve repeatedly hiked rates starting last year.
Some topics will likely be off-limits, however. The March letter to Becker said senators would stick to questions that did not require him to disclose “confidential supervisory information.”
“You also do not need bank records and files to provide informative testimony,” wrote Brown and Scott.
In a separate hearing May 18, the committee will hear from top federal bank regulators, including Michael Barr, vice chair for supervision at the Federal Reserve, Martin Gruenberg, chairman of the Federal Deposit Insurance Corp., Michael Hsu, acting comptroller of the Currency, and Todd Harper, chair of the National Credit Union Administration.
Barr and Gruenberg are both expected to face additional questions about oversight at SVB, Signature and the latest bank to fail, California-based First Republic Bank.
The slow-motion collapse of First Republic over the past several months culminated this weekend in a federal takeover and a quick sale to JPMorgan Chase, announced early Monday morning.
In addition to the federal witnesses, two high-profile state regulators responsible in part for the oversight of SVB, First Republic and Signature Bank will also appear before the committee: California Department of Financial Protection and Innovation Commissioner Clothilde Hewlett and New York State Department of Financial Services Superintendent Adrienne Harris.