Audio Posts and Shared Links Audio Sources - Full Text Articles

SVB’s Greg Becker previously asked Congress to ease regulatory oversight on the bank, citing its own ‘strong risk management practices’

Greg Becker, CEO of SVB Financial, is shown speaking during the Milken Institute Global Conference in Beverly Hills, California, on May 3, 2022.Greg Becker, CEO of SVB Financial

Photo by PATRICK T. FALLON/AFP via Getty Images

  • SVB CEO Greg Becker lobbied Congress in 2015 to ease regulatory oversight on the bank.
  • “SVB, like our mid-sized bank peers, does not present systemic risks,” he wrote.
  • In 2018, Congress and President Trump exempted regional banks like SVB from some Dodd-Frank rules.

Before Silicon Valley Bank collapsed last week, CEO Greg Becker lobbied Congress to ease regulatory rules on the lender and others of its size, The Lever reported.

In 2015, he wrote to the Senate asking that regional banks, including SVB, be spared from rules in the Dodd-Frank law that was created in the aftermath of the global financial crisis, saying they created significant burdens without producing any regulatory benefit.

“SVB, like our mid-sized bank peers, does not present systemic risks,” Becker wrote, noting that SVB doesn’t engage in complex derivatives deals or global investment banking.

Instead, SVB’s core business is “traditional banking,” meaning taking in deposits and lending out money, he added. 

In the years following the 2008 crash, SVB continued to boost lending while reducing the amount of write-offs for loans that went bad, according to Becker. “Taken together, these numbers demonstrate SVB’s deep understanding of the markets it serves, our strong risk management practices, and the fundamental strength of the innovation economy.”

He also said that Congress should lift a financial threshold at which banks would be subjected to stricter standards, such as stress tests and capital requirements. This would trigger when a bank reached $50 billion in assets, which SVB at the time was on the brink of crossing.

“Given the low risk profile of our activities and business model, such a result would stifle our ability to provide credit to our clients without any meaningful corresponding reduction in risk,” he said.

He said the threshold should be lifted to at least $100 billion and as much as $250 billion, adding that SVB already had sufficient risk management in place while more regulation would divert resources away from job creation, especially given that his bank invested heavily in startups and venture capital.

“As a result of taking these steps, we believe we are effectively managing the risks of our business and reasonably planning for possible unfavorable futures business scenarios,” Becker wrote.

Other regional banks lobbied for easier rules too. And in 2018, Congress passed and President Donald Trump signed a law bringing up the threshold for stress tests to $250 billion.

Last week, SVB had $209 billion in managed assets, still under the $250 billion threshold. The institution became the nation’s second-largest bank failure, after a discounted bond sale resulted in a $1.8 billion loss that triggered a bank run.

SVB was ultimately shut down by regulators on Friday with the Federal Deposit Insurance Corporation taking over. 

Read the original article on Business Insider
WP Radio
WP Radio