‘You Made A Really Stupid Bet’: Sen. Kennedy Rips Into Ex- Silcon Valley Bank Head

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The recent hearing of the Senate Banking Committee featuring executives from two failed US banks, Silicon Valley Bank (SVB) and Signature Bank, revealed how the top executives of these banks were not only rewarded for short-term gains but were also able to pocket millions of dollars from the sale of their stocks even after their banks collapsed.

Republican Louisiana Sen. John Kennedy confronted former Silicon Valley Bank CEO Greg Becker’s Collapse

The Senate Banking Committee held a hearing on Tuesday to discuss why two large U.S. banks failed, and what regulators could have done to avoid the calamities.

Executives from the failed Silicon Valley Bank (SVB) and Signature Bank were present to answer questions.

During the hearing, Republican Louisiana Sen. John Kennedy confronted former SVB CEO Greg Becker about his decision-making leading up to the bank’s failure.

Executives at the banks were paid millions of dollars in the form of company stock, and Becker was no exception. Before SVB’s failure, he sold $3.6 million in company stock, according to Bloomberg.

“Mr. Becker, you made a really stupid bet that went bad, didn’t you? And the taxpayers of America had to pick up the tab for your stupidity, didn’t they?” Kennedy asked.

Becker attempted to explain the bank’s failure as the result of events that he couldn’t have foreseen, but Kennedy disagreed.

“No, this wasn’t unprecedented. This was bone-deep, down to the marrow, stupid,” Kennedy said. “You put all your eggs in one basket … and unless you were living on the international space station, you could see that interest rates were rising and you weren’t hedged.”

Kennedy then asked Becker if, when interest rates rise, the value of long-term government bonds declines. Becker answered affirmatively.

Kennedy then accused Becker of not purchasing hedges because it would have cut into his profits.

The exchange between Kennedy and Becker is a prime example of how America’s taxpayers can end up footing the bill for corporate greed.

In this case, the executive reaped the rewards of his risky bet and left the taxpayers to pick up the tab for his failure.

It’s estimated that the taxpayers will be on the hook for up to $19 billion in the case of Silicon Valley Bank’s collapse.

That’s money that could have gone toward infrastructure, education, or any number of other worthwhile government programs, but instead it’s being used to bail out a failed bank.

The case of SVB is an example of how the system is set up to reward risk-taking and incentivize short-term gains over long-term stability. Executives are rewarded more for increasing stock prices in the short term than for ensuring their companies’ long-term health.

The American people deserve better. We need to have a system in place that rewards responsible decision-making and penalizes recklessness.

We need to make sure that executives are held accountable for their actions and that taxpayers are not on the hook for corporate greed.




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