WASHINGTON, May 18 (Xinhua) -- The U.S. Senate on Thursday wrapped up three straight days of banking hearings, in the wake of the Silicon Valley Bank (SVB) crash.
The hearings came more than two months after the bank's implosion and were conducted in a bid to better understand the failure of SVB and two additional banks thereafter.
Both sides of the aisle demonstrated a rare moment of unity, as the Senate Banking Committee grilled three bank executives on Tuesday.
Former First Republic Bank CEO Mike Roffler, former SVB CEO Greg Becker and former chairman and co-founder of Signature Bank Scott Shay, sat in the hot seat, grilled by lawmakers who expressed outrage over what they described as the executives' failure to admit fault.
Banking Committee members said the banks failed to reduce risks and noted that executives were awarded millions of U.S. dollars in compensation while their banks were collapsing.
SVB had incurred 31 supervisory warnings when the bank imploded. But despite that, Becker received a 1.5 million dollar bonus.
Becker maintained that the U.S. Federal Reserve raised interest rates more than anyone had anticipated, and defended himself by saying he could not think of anything he did that was detrimental to SVB's stability.
In its report on SVB, the U.S. Federal Reserve said that "regulatory standards for SVB were too low, the supervision of SVB did not work with sufficient force and urgency, and contagion from the firm's failure posed systemic consequences not contemplated by the Federal Reserve's tailoring framework."
The Fed also labeled SVB's collapse as a "textbook case of mismanagement."
Both democrats and Republicans were united in their criticisms.
"It sounds a lot like my dog ate my homework," said Senate Banking Committee Chairman Sherrod Brown on Tuesday, using an expression that American children use when they fail to complete homework assignments.
"Mr. Becker, you've blamed pretty much everyone else for SVB's failures," Brown said, adding that it is "hard to believe a 30-year bank executive, and CEO for 12 years, should have needed a roadmap from the regulators to find the obvious problems that needed to be fixed and weren't."
Republican Senator Tim Scott said he was "shocked" at the "complete negligence and disregard" for the economic realities the United States was "facing under your leadership."
Critics also said that regulators were asleep at the wheel.
Brookings Institution Senior Fellow Darrell West told Xinhua that Washington "always has been enamored with Silicon Valley firms" and has not subjected them to much oversight or regulation.
"Political leaders often think that tech firms have some special magic that allows them to accomplish things other businesses are not able to do," said West.
"In the future, there will be much greater scrutiny of Silicon Valley-based financial institutions to make sure they are engaging in appropriate risk levels," West said.
Clay Ramsay, a senior research associate at the Center for International and Security Studies at the University of Maryland, told Xinhua the key issue is whether to go back to the prior standards for regulating midsize banks, before Congress loosened them in 2018.
"I would give this a 50-50 chance," said Ramsay. ■
