Former Silicon Valley Bank CEO Greg Becker Should Testify Before Congress

Silicon Valley Bank had been experiencing weak compliance and internal controls with Bank Secrecy Act/Anti-Money Laundering, Current Expected Credit Losses, liquidity risk management, interest rate risk measurement, data protection, auditing framework, and even the Volcker Rule, in many cases going back to 2016. Today, as promised, Vice Chair for Supervision of the Board of Governors of the Federal Reserve Board System Michael Barr released a report where the Federal Reserve investigated itself about supervisory issues with Silicon Valley Bank. Pundits had been waiting to see if this would be a great Federal Reserve mea culpa. In part it was. As I posted on Twitter, the incredible dysfunction at Silicon Valley Bank is evident in the Silicon Valley Bank Review Supervisory Materials. What was a surprise to me was that there were serious problems at Silicon Valley Bank since 2016, and that not only did SVB’s
VB
immediate regulators the San Francisco Federal Reserve Bank and the California Department of Financial Institutions knew, but also the Federal Deposit Insurance Corporate and the Consumer Financial Protection Bureau also knew about these issues.

It has been a month since Silicon Valley Bank failed, and its mismanagement continues to exacerbate uncertainty U.S. regional banks’ financial health. Soon after its demise, numerous market participants, academics, politicians, and analysts, such as I, weighed in on the lack of oversight, weak risk management, and lack of interest rate and liquidity measurements and control at SVB. Already at the end of March, we had heard from Michael Barr, Vice Chair for Supervision of the Board of Governors of the Federal Reserve Board System, Martin Gruenberg Chairman of the FDIC, and Nellie Lang, Under Secretary for Domestic Finance of the U.S. Treasury. They were grilled by members of the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs.