Senators from both parties slammed the former CEO of Silicon Valley Bank, accusing him of mismanagement that they say was fueled by short-term profits and the millions he stood to gain in compensation.
In a particularly heated exchange, Sen. John Kennedy, R-La., excoriated Becker over the bank's failure to protect itself against the vulnerability of large holdings in Treasury and mortgage bonds.interest rates over the past year, the spike dropped the value of those bonds and punched a hole in the bank's balance sheet.
In response, Becker cited an "unprecedented" bank run driven by depositor panic on social media that spurred the withdrawal of about $42 billion in a matter of 10 hours."This wasn't unprecedented," Kennedy said. "Unless you were living on the International Space Station, you could see interest rates were rising and you weren't hedged."
Kennedy accused Becker of foregoing the acquisition of hedges because such a move would have cost the bank money, cutting into its profits and reducing Becker's performance-related compensation.Becker responded: "Our compensation was predominantly long-term in nature."panicFormer CEO of Silicon Valley Bank Gregory Becker takes his seats as he arrives for a Senate Banking Committee hearing on Capitol Hill, May 16, 2023, in Washington, D.C.
While defending his management of Silicon Valley Bank, Becker apologized for the harm caused by the failure of the bank.
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