‘Bone-Deep Down To The Marrow Silly’: Sen. Kennedy Grills Silicon Valley Financial institution CEO On Collapse
Republican Louisiana Sen. John Kennedy confronted former Silicon Valley Financial institution (SVB) President Greg Becker about his decision-making previous the financial institution’s failure at a Senate Banking Committee listening to Tuesday.
“Mr. Becker, you made a very silly wager that went unhealthy, didn’t you? And the taxpayers of America needed to decide up the tab in your stupidity, didn’t they?” Kennedy requested. (RELATED: Right here’s How The Common American Might Finish Up Footing The Invoice For Silicon Valley Financial institution’s Collapse)
Becker tried to clarify the financial institution’s failure as the results of occasions that he couldn’t have foreseen.
“Senator, there have been a collection of unprecedented occasions that occurred that led us to the place we’re at the moment,” Becker stated.
Kennedy disagreed.
“No, this wasn’t unprecedented. This was bone-deep, all the way down to the marrow, silly,” he responded. “You place all of your eggs in a single basket … and except you have been dwelling on the worldwide area station, you possibly can see that rates of interest have been rising and also you weren’t hedged.”
Kennedy requested Becker if, when rates of interest rise, the worth of long-term authorities bonds declines, and Becker answered affirmatively. “And also you don’t need to be Einstein’s cousin to know that, do you?” Kennedy requested.
“No you don’t,” Becker answered.
SVB had roughly 55% of its property invested in these bonds, in accordance with Becker on the listening to. When rates of interest rose, they misplaced immense worth.
Kennedy accused Becker of not buying hedges as a result of he would obtain much less compensation in his bonus.
“You weren’t hedged. When you’d purchased these hedges, that may have reduce into your income, wouldn’t it?” Kennedy requested.
Becker additionally bought $3.6 million in firm inventory earlier than his financial institution failed in March, in accordance with Bloomberg.
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