Former SVB and Signature Bank executives to testify at Senate hearing

WASHINGTON — Former top executives of Silicon Valley Bank and the bankrupt Signature Bank will testify before the Senate on May 16, the House Banking Committee announced Wednesday night.

Greg Becker was managing director of California-based SVB when it collapsed on March 10. Scott Shay and Eric Howell were chairman and chairman, respectively, of New York-based Signature Bank when it collapsed just days after SVB failed.

The hearing will mark the first time either of the men will speak in public about the bank failures that rocked US financial markets. The news that the executives would testify came after Becker declined a previous invitation to appear at a March 28 committee hearing.

“You must answer for the downfall of the bank,” committee chairman Sen. Sherrod Brown, D-Ohio, and Sen. Tim Scott, R.S.C., wrote in their March 23 report. letter to Becker.

Former Signature Bank CEO Joseph DePaolo received a similar letter at the time. DePaolo is not expected to testify next week.

Former bank executives can expect grilling from senators on both sides of the aisle.

In the nearly two months since the banks’ collapse, CNBC reported on stock sales by four senior SVB executives in the weeks and months leading up to the bank’s collapse. The senators followed and asked Securities and Exchange Commission Chairman Gary Gensler will investigate the sales.

Tough questions have also been raised about why Becker and other SVB executives received their annual bonuses just hours before the federal government took control of the bank.

Becker can also expect to be faced with questions about why Silicon Valley Bank ignored repeated warnings regulators that the bank would face a risk of collapse if interest rates rose rapidly – which they did as the Federal Reserve raised rates several times from last year.

However, some topics will likely be banned. The March letter to Becker said the senators would stick to issues that did not require him to disclose “confidential surveillance information.”

“Nor do you need bank statements and files to provide informative testimony,” Brown and Scott wrote.

In a separate hearing on May 18, the committee will hear from key federal banking regulators, including Michael Barr, vice chairman of oversight at the Federal Reserve, Martin Gruenberg, chairman of the Federal Deposit Insurance Corp., Michael Hsu, comptroller Acting Mint, and Todd Harper, Chairman of the National Credit Union Administration.

Both Barr and Gruenberg are expected to face additional questions about oversight of SVB, Signature and the latest bank to fail, California-based First Republic Bank.

The slow-motion collapse of the First Republic over the past few months culminated over the weekend with a federal takeover and a quick sale to JPMorgan Chase announced early Monday morning.

In addition to federal witnesses, two high-level state regulators responsible in part for oversight of SVB, First Republic and Signature Bank will also appear before the committee: Clothilde Hewlett, commissioner of the Department of Financial Protection and Innovation of California, and the New York State Department of Adrienne Harris, Superintendent of Financial Services.