‘They did not do their job’ Tester Says of Failed Silicon Valley Bank Executives
At Banking Committee hearing, Senator grills experts on regulatory failures, calls for clawing back executives’ bonuses
In his continued push to hold executives accountable in the wake of recent bank collapses, U.S. Senator Jon Tester today pressed banking experts on the regulatory failures that led to the collapse of Silicon Valley Bank and Signature Bank, and pushed for the executives of the failed banks to have their bonuses clawed back.
During the Senate Banking Committee hearing, Tester demanded accountability for bank regulators and executives.
“It is clear that the management of these banks made poor decisions,” Tester said. “They ignored risk factors that ultimately resulted in failure. It’s also clear that the regulators weren’t dropping the hammer on these banks, and the executives or the boards, even when the problems that supervisors had identified were not being addressed. These were problems that the executives knew about, but instead of addressing them, they gave themselves bonuses, which should make everybody in this room’s blood boil.”
Tester also emphasized his concern that regulators may respond to the recent failures by over-regulating mid-sized banks that are following the rules and serving small businesses across the country.
“My concerns is – similar to what happened in 2008 – that the regulators will respond in a way where they put the screws to the banks who are following the rules, and the board is paying attention, and the executives are doing a good job. Do you see it the same way and is there anything we can do to stop them?”
Finally, Tester drove home that both bank regulators and executives failed to do the job they were paid to do, dealing a huge financial blow to bank customers.
“The only thing that I would just say is that this board of directors did not do their job. Their executives did not do their job. If they got paid minimum wage they got overpaid.”
Tester has led the charge to demand accountability for the recent banking crisis. Immediately following the collapse of Silicon Valley Bank and Signature Bank, Tester issued a statement opposing taxpayer bailouts for either institution. Later that month, Tester sent a letter to U.S. Federal Deposit Insurance Corporation (FDIC) Chairman Martin J. Gruenberg and Federal Reserve Chairman Jerome H. Powell urging federal financial regulators to hold Silicon Valley Bank (SVB) executives accountable and use every tool at their disposal to claw back reported bonuses received by the Bank’s leadership.
Following the recent collapse of First Republic Bank, Tester issued a statement again opposing taxpayer bailouts and vowing to hold bank executives accountable for engaging in risky behavior.