FDIC Investigating Tech Bank Leaders Over $22.5bln LossesAllgemein
• U.S. Bank Regulators are investigating the leadership of three failed tech banks: Silicon Valley Bank, Signature Bank, and Silvergate Bank.
• Martin Gruenberg, Chairman of the FDIC, and Michael Barr, Vice Chairman of the Fed will share their findings with the U.S. Senate Banking Committee.
• The FDIC is expecting a $22.5 billion hit to its insurance fund due to uninsured deposits as a result of mismanagement and dangerous business concentrations at these banks, especially in digital assets at Signature Bank.
U.S. Bank Regulators Investigating Tech Banks
U.S. bank regulators are investigating the leadership of three failed tech banks: Silicon Valley Bank, Signature Bank and Silvergate Bank for their role in causing losses to these institutions and for misconduct in managing them according to testimony prepared by Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg for a U.S Federal Senate Banking Committee hearing scheduled to be held Tuesday March 27th 2023 .
FDIC Chief Describes Mismanagement
Gruenberg detailed mismanagement and dangerous business concentrations in his written remarks set for delivery to the U.S Senate; particularly so at Signature where he noted that there was high concentration in digital assets resulting in an expected $22.5 billion hit to its insurance fund mostly due to unpaid deposits . He also stated that top officials from these companies would face scrutiny “for the losses they caused to the banks and for their misconduct in the management of the banks”.
Fed’s Vice Chair Shares Findings
Federal Reserve Vice Chairman for Supervision Michael Barr shared similar revelations about trouble inside California-based Silicon Valley Bank during his own testimony set for delivery at Tuesday’s hearing . He highlighted some key areas of concern such as inadequate risk management practices, weak capitalization levels, poor governance structure as well as insufficient board oversight which all combined contributed significantly towards this bank’s collapse .
FDIC Put Itself on Hook For Expected Losses
The FDIC put itself on hook for any expected losses related to these failed tech banks through its involvement in resolving certain issues such as those listed above according to Gruenberg’s description set forth in his written statement prepared for Tuesday’s hearing . The agency is currently conducting a probe into what went on at each institution with an aim towards holding accountable those responsible .
Senate Hearing Scheduled For Tuesday March 27th
The US senate banking committee will hear from both Gruenberg and Barr tomorrow (Tuesday) during which time they will have an opportunity to explain what went wrong at each institution and potential solutions going forwards . This could potentially pave way towards more effective supervision over all financial institutions within US jurisdiction thus safeguarding against future collapses like those experienced recently by Silicon Valley ,Signature ,Silvergate Banks etcetera