The heads of two faltering US lenders at the heart of this year’s banking crisis have come under fire from US politicians for taking risks in their quest to “get rich”, as former Silicon Valley CEO Greg Baker appeared before the influential Senate Banking Committee alongside Signature Bank chairman Scott Shay and former bank chairman Eric Howell, respectively, to face questions about the collapse of both lenders in March.
The Democratic chair of the committee, Sherrod Brown, attacked the bankers and said the lenders’ management was lethal, asking, “Why did you let things get so bad? Why did these banks ignore warnings from regulators?” But Brown was quick to reply: “There is a simple answer, the same one we find for most questions about the failures of big banks: because the CEOs were rich.”
The three men refused to commit voluntarily to hand over the millions of dollars they had paid before their banks collapsed. Senator John F. Kennedy, appearing publicly for the first time since the failure of Silicon Valley, attacked the heads of the failing banks.
The failure of tech-focused banks Silicon Valley and Signature, along with the closing of cryptocurrency-focused Silvergate last March sent shock waves through the financial industry that also upended Credit Suisse. The second largest bank in Switzerland.
Banking turmoil continues
The turmoil continued this month with the collapse of First Republic, another US regional lender, which was bought out by JPMorgan after regulators intervened.
The Silicon Valley bank had large operations in Britain and as fears grew that its failure would create chaos in the UK tech industry, prompting the government and the Bank of England to orchestrate a bailout. The Silicon Valley business in the UK was eventually sold to HSBC for £1 ($1.2) and is now being absorbed into the FTSE 100.
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The British subsidiary of Silicon Valley bank had its own board of directors and said it was being restructured, with the city’s well-known tech entrepreneur, Vin Morea, stepping down as a non-executive officer of Silicon Valley UK and three senior officials. HSBC executives.
losses on the way
On Wednesday, UBS expected to incur a financial loss of about $17 billion after acquiring Credit Suisse. UBS expects a negative impact of $13 billion from fair value adjustments to the assets and liabilities of the combined group, and the bank expects to incur $4 billion in potential litigation and regulatory costs resulting from capital exits. But the bank’s financial reserves will help it absorb potential losses and may result in an increase in its profits in the second quarter of the year if UBS completes the deal next month as planned.
One of the main factors that led to the collapse of American banks since mid-March is the exposure of banks such as “Silicon Valley” Bank and “Signature” Bank, and then this month “First Republic” Bank, “Back West Bank” and others, to a sharp decline in liquidity as a result of customers withdrawing their deposits from those banks. Banks are massive, and when troubled banks try to save capital, they are forced to sell assets for much less than what they bought them for, thus increasing their losses and collapsing.
And with the continuation of the series of collapse of small and medium-sized regional US banks, some in the market fear the transmission of infection to Europe, but the European authorities insist that the banking sector situation in the eurozone countries is good and there are no concerns similar to what is happening in the United States, and in the season of financial disclosures for the quarter The first of the year In recent days, most of the big banks have announced good returns and profits, despite the crisis of collapse in America.
