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Senators urge former CEO to testify

U.S. Sen. Sherrod Brown (D-OH) speaks to members of the media exterior a briefing on the newest growth of the COVID-19 outbreak to Senate members at Dirksen Senate Workplace Constructing March 12, 2020 on Capitol Hill in Washington, DC.

Alex Wong | Getty Pictures

WASHINGTON — Bipartisan leaders of a Senate committee investigating the failures of Silicon Valley Financial institution and Signature Financial institution referred to as Thursday for each corporations’ former CEOs to testify concerning the collapses which have sparked fears about broader financial injury.

Ex-SVB CEO Gregory Becker and former Signature CEO Joseph DePaolo “should reply for” their banks’ “downfall,” wrote Sens. Sherrod Brown, D-Ohio, and Tim Scott, R-S.C., in letters to the previous executives. Brown and Scott are the chairman and rating member, respectively, of the Senate Banking, Housing and City Affairs Committee.

Each Becker and DePaolo indicated they had been unable to attend a March 28 Banking Committee listening to on the corporations’ failure, based on the letters. Brown and Scott urged the 2 former executives to reply the panel’s questions “at a future date.”

Federal Deposit Insurance coverage Company Chairman Martin Gruenberg, Federal Reserve Vice Chair for Supervision Michael Barr, and Treasury Beneath Secretary for Home Finance Nellie Liang are scheduled to testify on the Senate listening to. Barr is main the Fed’s inner evaluate of the financial institution failures.

Of their letter to Becker, Brown and Scott mentioned they sought data on SVB’s alleged negligent enterprise practices, together with the “overwhelming” proportion of uninsured depositors shortly earlier than the FDIC closed the financial institution earlier this month.

“Because the CEO of SVB on the time of its collapse, your testimony on the financial institution’s company governance, threat administration, fast development, and consumer business and sector focus, in addition to the overwhelming proportion of uninsured depositors and the cost of bonuses within the hours main as much as the seizure of the financial institution by regulators, would tackle a number of vital issues the Committee wants to grasp,” the senators wrote.

Earlier than it collapsed, 94% of SVB’s deposits sat above the FDIC’s $250,000 insurance coverage restrict. The senators additionally requested DePaolo to clarify Signature’s “outsized proportion of uninsured depositors” together with its “company governance, threat administration, fast development (and) enterprise combine.”

Testimony might be supplied with out disclosing confidential supervisory data, financial institution data or information, Brown and Scott wrote.