March 14, 2023

Senator Warren Calls for Answers from Silicon Valley Bank CEO Following Collapse

“You lobbied for weaker rules, got what you wanted, and used this opportunity to greedily and incompetently abdicate your basic responsibilities to your clients and the public - facilitating a near-economic disaster”

Text of Letter (PDF) 

Washington, D.C. — U.S. Senator Elizabeth Warren (D-Mass.) sent a letter to ex-Silicon Valley Bank CEO Greg Becker to inquire about his and SVB lobbyists’ efforts to roll back Dodd-Frank rules prior to the collapse of the bank.

Five years ago today, the Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act, rolling back banking regulations enacted by the Dodd-Frank Act and raising the asset threshold at which a bank is considered and regulated as a “systemically important financial institution” (SIFI) to $250 billion. This exempted SVB and other mid-sized banks from regular stress testing and enhanced liquidity, risk management, and resolution plan, or “living will,” requirements. 

“These rules were designed to safeguard our banking system and economy from the negligence of bank executives like yourself – and their rollback, along with atrocious risk management policies at your bank, have been implicated as chief causes of its failure,” wrote Senator Warren. 

Mr. Becker and SVB executives engaged in intense lobbying to roll back these Dodd-Frank protections. In a 2015 statement submitted to the Senate Committee on Banking, Housing, and Urban Affairs, Mr. Becker indicated that “SVB … does not present systemic risks,” and that he had conducted “a range of different stress tests designed to measure and predict the risks associated” with the bank in different economic scenarios.

“Despite your assurances to Congress that SVB was sufficiently protected from risk because of your various efforts, it is now clear that SVB was wholly unequipped to independently assess its business’s risk,” wrote Senator Warren. “SVB failed – while its Chief Risk Officer position sat vacant for eight months as its financial standing deteriorated – because it failed to address two key risks: concentration in your client base, and rising interest rates.”

In the letter, Senator Warren points to Mr. Becker’s $3.6 million sale of company stock just days before SVB’s collapse, and bonuses that were paid to SVB employees just before the Federal Deposit Insurance Corporation (FDIC) shut the bank’s doors. 

“You lobbied for weaker rules, got what you wanted, and used this opportunity to greedily and incompetently abdicate your basic responsibilities to your clients and the public – facilitating a near-economic disaster,” concluded Senator Warren. “There is much work to be done to understand the failure of SVB – and these efforts must start with understanding your role in the rollback of banking regulations that facilitated this failure.”

Senator Warren asked Mr. Becker a series of eight questions, asking for answers by March 28, 2023.

Senator Warren has been a leading voice on bank regulation and consumer protection:

  • In March 2023, Senator Warren published an op-ed in the New York Times urging Congress and federal regulators to strengthen weakened rules to avoid another crisis, intensify bank oversight, reform deposit insurance, and hold S.V.B. executives accountable for any malfeasance or mismanagement that led to this failure.
  • In March 2023, released a statement following the collapse of Silicon Valley Bank (SVB).
  • In March 2023, Senators Warren, Van Hollen (D-Md.), and Marshall (R-Kan.) sent a bipartisan letter to the world’s largest crypto exchange, Binance, and its U.S. affiliate, Binance.US, asking for answers about the company’s finances, risk management, and regulatory compliance as it faces investigations into potential crimes – including sanctions evasion, money laundering, and unlicensed money transmission.
  • In February 2023, at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Warren raised concerns that key parts of the crypto industry are not subject to the same money laundering laws that cover other financial organizations, allowing financial criminals to use crypto to launder billions. 
  • On December 14, 2022, Senators Warren and Roger Marshall (R-Kan.) introduced the Digital Asset Anti-Money Laundering Act of 2022, bipartisan legislation that would mitigate the risks that cryptocurrency and other digital assets pose to the United States’s national security by closing loopholes in the existing anti-money laundering and countering of the financing of terrorism (AML/CFT) framework and bring the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system.
  • On December 8, 2022, Senators Warren and Tina Smith (D-Minn.) sent letters to three key banking regulators to raise concerns about the ties between the banking industry and crypto firms. 
  • On December 6, 2022, Senators Warren, Marshall, and John Kennedy (R-La.) wrote to Silvergate, the bank that reportedly facilitated the transfer of FTX customer funds to Alameda Research, seeking answers about the bank’s role in the loss of billions of dollars in customer funds.
  • On November 30, 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren defended FDIC Acting Chair Martin Greunberg from baseless attacks and called on regulators to keep crypto out of the banking system following FTX’s collapse.
  • On November 23, 2022, Senators Warren and Sheldon Whitehouse (D-R.I.) sent a letter to the Department of Justice requesting personal accountability for former FTX CEO Sam-Bankman Fried and any complicit FTX executives for wrongdoing following the exchange’s collapse. 
  • On November 22, 2022, Senator Warren published an op-ed in the Wall Street Journal urging federal regulators to use their expansive authorities to crack down on crypto fraud and hold the industry to the same basic standards as other financial activities. 
  • On November 17, 2022, Senator Warren, along with Senator Dick Durbin (D-Ill.), sent a letter to Sam Bankman-Fried, founder and former CEO of FTX Trading Ltd. (FTX), and John Jay Ray III, the newly appointed CEO of FTX, seeking information on the reported misuse of billions of dollars of customer funds and other disturbing allegations that continue to emerge about the company’s fraudulent and illicit practices.
  • On October 25, 2022, Senators Warren and Whitehouse and Representatives Alexandria Ocasio-Cortez (D-N.Y.), Jesús “Chuy” García (D-Ill.), and Rashida Tlaib (D-Mich.) sent a letter to the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, the U.S. Department of Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau, seeking information about the steps each regulator is taking to stop the revolving door between financial regulatory agencies and the cryptocurrency industry.
  • In September 2022, Senator Warren sent a letter to Treasury Secretary Janet Yellen calling on the Treasury Department and the Financial Stability Oversight Council to build a strong regulatory framework for the crypto market.
  • In March 2022, Senator Warren, Senate Armed Services Committee Chair Jack Reed (D-R.I.), Senate Intelligence Committee Chair Mark Warner (D-Va.), and Senate Defense Appropriations Subcommittee Chair Jon Tester (D-Mt.) introduced the Digital Asset Sanctions Compliance Enhancement Act to ensure that Vladimir Putin and Russian elites don't use digital assets to undermine the international community’s economic sanctions against Russia following its invasion of Ukraine.
  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the various cryptocurrency tools that could make it easier for sanctioned individuals to hide their wealth and lessen the impact of Russian sanctions.
  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren warned that cryptocurrency may allow Russia to dodge sanctions and urged stronger regulation of the crypto market to ensure that countries, drug traffickers, cyber criminals, and tax cheats can’t evade economic pain.
  • In March 2022, Senators Warren, Warner, Reed, and Sherrod Brown (D-Ohio), Chair of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Treasury Secretary Janet Yellen, asking about the Treasury Department’s plans to enforce sanctions-compliance guidance for the cryptocurrency industry to ensure that economic sanctions remain an effective tool for achieving foreign policy goals.
  • In January 2022, Senators Warren and Reed (D-R.I.) sent a letter to Dino Falaschetti – the Trump-appointed Director of the Office of Financial Research (OFR) in the U.S. Department of the Treasury – urging the OFR to use its critical tools to collect data to safeguard the financial system from stability risks.
  • In January 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren pressed Fed Chair Jerome Powell on the role of corporate concentration in driving up prices for consumers during his renomination hearing to be Chair of the Board of Governors of the Federal Reserve System.
  • In December 2021, during a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren raised concerns over the growing risks presented by stablecoins. 
  • In September 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on regulators to step up to address crypto's regulatory gaps and ensure an inclusive financial system. 
  • In July 2021, Senator Warren sent a letter to U.S. Treasury Secretary Janet Yellen urging the Financial Stability Oversight Council (FSOC) to use its existing authority to address risks posed by the highly volatile cryptocurrency market and lead the financial regulatory agencies in developing a comprehensive and coordinated approach to regulating cryptocurrencies. 
  • In July 2021, Senator Warren sent a letter to SEC Chair Gary Gensler requesting information about the agency's authority to regulate cryptocurrency exchanges and protect consumers from risks posed by the highly volatile cryptocurrency market.
  • In June 2021, chairing a hearing of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren delivered remarks on the opportunities and risks that digital currencies present. 
  • In a June 2021 interview, Senator Warren called the market for crypto the “wild west,” and said digital currency is “not a good way to buy and sell things and not a good investment and an environmental disaster.”
  • In May 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren questioned Randal K. Quarles, Vice Chairman for Supervision at the Board of Governors of the Federal Reserve System, about his decision to weaken supervision for large foreign banks including Credit Suisse, which suffered the largest losses from the implosion of the hedge fund Archegos.

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