At Hearing, Tester Questions Why Regulators Failed to ‘Drop the Hammer’ on Silicon Valley Bank
Senator: “It looks to me like the regulators knew the problem but nobody dropped the hammer”
Continuing his efforts to ensure bank executives and federal regulators are held accountable for the collapse of Silicon Valley Bank, U.S. Senator Jon Tester today pressed officials on their failure to “drop the hammer” on bank management during a Senate Banking Committee hearing.
Tester demanded that as regulators conduct their review of what led up to the Bank’s collapse, they make sure to fix to problem.
“I am not a banker, I ain’t even close to being a banker, I’m a dirt farmer. And I’m gonna tell you, when they laid out what had happened at this bank over the last two years, you did not have to be an accountant to figure out what the hell was going on. And all I’ve got to say is as you do your look back at what transpired, it better be fixed. If it’s the regulators’ fault, it better be fixed. If it’s the regulations fault, it better be fixed. If it’s something else, I hope there’s a report to this committee… It looks to me like the regulators knew the problem, but nobody dropped the hammer.”
In his opening remarks, Tester reiterated his longstanding opposition to taxpayer funded bailouts and stressed the importance of holding bank executives and federal regulators accountable.
“In 2008 I voted against the bailouts of the big banks because I don’t support taxpayer bailouts. We do need to protect American consumers and small business folks. We need to hold bank executives when they screw up. And if the regulators were asleep at the wheel, we need to hold them accountable.”
Tester then questioned officials appearing before the committee on why they failed to drop the hammer on Silicon Valley Bank executives.
“So what point in time do the fed[eral] regulators drop the hammer on this outfit? I don’t even need to get going on the bank CEO taking a ton of money right before this thing went belly up… But yet for over a year, regulators were saying to this bank ‘straighten up and fly right,’ and they never did a damn thing about it. And the regulators didn’t make it so damn miserable – which my understanding is regulators are pretty good at that when they want to be – that these folks would adjust their business plan to take care of the risks that was in their bank.”
Witnesses appearing before the Senate Banking Committee included The Honorable Martin Gruenberg, Chairman, Federal Deposit Insurance Corporation (FDIC); The Honorable Michael Barr, Vice Chairman for Supervision, Board of Governors of the Federal Reserve System; and The Honorable Nellie Liang, Undersecretary for Domestic Finance, U.S. Department of the Treasury.
Earlier this month, Tester sent a letter to FDIC Chairman Gruenberg and Federal Reserve Chairman Jerome H. Powell urging federal financial regulators to hold Silicon Valley Bank executives accountable and use every tool at their disposal to claw back reported bonuses received by the Bank’s leadership.