Former Silicon Valley Bank CEO disputes fed's findings on bank's failure

Federal regulators and former Silicon Valley Bank CEO Greg Becker have offered different explanations for the bank's failure.

In a self-examination last month, the Federal Reserve blamed SVB's failure on "bad management and lax regulation." The Fed said that SVB grew too big too fast, prioritized growth over risk management, and ignored repeated warnings by examiners. The Fed also noted that it was handicapped by a 2018 law that eased regulation on midsize banks.

In his testimony to the Senate on Tuesday, Mr. Becker disputed the Fed's findings. He said SVB's failure was due to a combination of factors, including the Fed's easy money policy, the COVID-19 pandemic, and the war in Ukraine.

Mr. Becker also said that SVB was subject to new regulations for "Large Financial Institutions" in 2022, which consumed significant resources and attention. He said he regularly met with SVB's regulators to discuss strategy, organizational changes, personnel changes, and regulatory issues.

Mr. Becker said that SVB had taken steps to address its risk management issues, including hiring more risk management staff and investing in new risk management technology. He noted that SVB was also working to improve its communication with regulators.

The debate over the causes of SVB's failure is likely to continue. However, the failure has raised questions about the effectiveness of the Fed's supervision of midsize banks.

Key Points

• SVB had significant resources and attention devoted to 2022 regulations for large financial institutions.
• The company took steps to address risk management issues, such as hiring additional staff and investing in new technology. 3. SVB's failure has raised questions about the effectiveness of Federal supervision of midsize banks.
• Federal regulators and former CEO Greg Becker have offered different explanations for the failure.
• The Fed has blamed SVB's failure on "bad management and lax regulation."
• Mr. Becker has disputed the Fed's findings and said that SVB's failure was due to a combination of factors.