Ex-CEO Comments on SVB Financial Group's Silicon Valley Bank Failure

Greg Becker, the former CEO of SVB Financial Group's Silicon Valley Bank, said that the bank failed because the Federal Reserve raised interest rates at the fastest rate in decades and people were upset about it on social media.

"The message from the Federal Reserve was that interest rates would stay low and that the inflation that was starting to rise would only be "transitory,"" Becker said in written testimony for a US Senate Banking Committee hearing on Silicon Valley Bank and Signature Bank on Tuesday. Both of these banks were taken over by regulators in March.

"In fact, in this low-yield environment made by the Federal Reserve, banks bought nearly $2.3 trillion worth of investment securities between the beginning of 2020 and the end of 2021." Silicon Valley Bank focused a lot on the ecosystem of technology startups. This, along with its stock of long-term bonds that lost value as interest rates went up, made it especially vulnerable to the bank run that led regulators to take the lender.

Its failure caused a number of other bank runs, which led to the seizure of Signature Bank a few days later and the ultimate failure of First Republic Bank as well. Becker said that the media's comparisons of SVB to Silvergate Capital Corp., which said it was going out of business just days before SVB was seized, added to the bank's failure.