Warren supports the clawback of SBV’s executive pay and stock sale proceeds

After second- and third largest bank failures in US history, policymakers are looking for more than answers—they want money. In a LETTERS to Greg Becker, the CEO of Silicon Valley BankThe parent company of SVB Financial, Massachusetts Sen. Elizabeth Warren asked if the executives would return the bonuses and salaries they earned “over the last five years” before their bank collapsed.

“While you and the company’s executives seem to have succeeded in cashing out before the crash, SVB’s customers were not so lucky,” he wrote on Tuesday, arguing that the executives should pay for the “precipitating a near economic disaster.”

The 40-year-old is tech-focused Silicon Valley Bank or SVB that failed miserably last week because of what Mark T. Williams, a professor at Boston University and former bank examiner at the Federal Reserve, said, SPOKE luck is “a major failure to manage asset-liability risk.” Warren said Tuesday that executives should not be rewarded with lucrative pay packages after their mismanagement forced the Federal Deposit Insurance Corporation (FDIC) to backstop depositors to “protect the economy” from “contagion” which threatens other banks in the region.

He asked Becker to answer a series of questions about his bank’s risk management strategy, his past lobbying efforts against banking regulations, and bonuses paid during the bank’s downfall.

SVB spent more than $2.2 billion in compensation for executives and rank-and-file employees last year, SEC filings show Becker was also awarded a total compensation package of $9.9 million in 2022 alone, including a $1.5 million cash bonus for improving the bank’s profitability, and as of 2021, SVB executives have earned $84 million from stock trading, CNBC reported Tuesday.

Several key executives also reported large stock sales last week before SVB imploded, including Becker, who sold $3.6 million in stock, and CFO Daniel Beck, who sold $575,000. Such sales should have been banned new insider selling rules which was issued by Securities and Exchange Commission Chair Gary Gensler in December that will take effect next month. The regulations make it so that executives must wait 90 days between the filing of plans to sell shares and when the sale is executed.

In his Tuesday letter, Warren questioned whether Becker and other executives knew SVB was in trouble at the time of the planned stock sale.

“Instead of making the safety and stability of your bank your top priority, you spent weeks pre-empting SVB’s failure to secure yourself $3.6 million by selling the company’s shares,” he wrote.

California Rep. Ro Khanna SAYS Saturday he also believes there should be a “clawback” of the money made by SVB executives from selling stock in recent weeks, adding a Monday. tweet that it is a reminder of “the need to impose strong financial regulations on banks.”

“Whatever his motive, and we need to know, that $3.6 million should go to the depositors,” he wrote.

Hours before regulators took control of SVB on Friday, the company also paid annual bonuses, CNBC reported, citing unnamed sources within the bank. SVB employees, who have been few in the country for a long time highest paid bankerswhich took in more than $250,000 on average in 2018, was also offered 45 days of work after the collapse. for 1.5 times their salary through the FDIC.

“Shareholders and executives of banks like SVB should not benefit from taxpayer dollars or the help of the FDIC to ensure buyers are not forced to submit to regulations that amount to more than a slap in the face. pulse,” Khanna said of the bonuses.

Warren also questioned SVB’s Becker, who serves on the board of the Federal Reserve Bank of San Francisco, over his efforts to restore shares of Dodd-Frank Wall Street Reform and Consumer Protection Act—designed to prevent bank runs and stabilize the financial system.

In 2015 tESTIMONY to the US Senate committee Becker said that SVB and other mid-sized banks face “significant burdens” that reduce their ability to provide proper banking services to of clients due to Dodd-Frank. He complained that the regulations—including liquidity coverage The requirements are intended to ensure that banks have enough money to provide for depositors in a worst-case scenario of a bank run—which would cause his “compliance costs to rise dramatically.”

The CEO added that his bank engages in “low-risk activities” and does not “present systemic risks” to financial systems. His efforts proved fruitful for the bank, as did some of the regulations Becker opposed thrown out or changed in subsequent years.

“You have no one to blame for your bank’s failure but yourself and your fellow executives,” Warren wrote of Becker’s efforts to curb regulation. “You lobbied for weaker rules, got what you wanted, and used this opportunity to abdicate your basic responsibilities to your clients and the public.”

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