The company’s CEO Greg Becker and Chief Financial Officer Daniel Beck both sold shares with an aggregate value of approximately three million dollars. Beck sold a total of one third of all his holdings in the company. Both sales were carried out under an organized plan for the timing of the sale of shares of associates of the company designed to dispel suspicion of fraudulent activity. A few hours before the bank closed, the bank distributed bonuses to employees worth millions of dollars.
As part of the rescue plan implemented by the Biden administration, the Federal Reserve and the FDIC announced that all customer deposits would be returned to them in full, using a special fund of the FDIC. This promise was made to the three banks that collapsed last week: SVB which managed 212 billion dollars, Signature which managed 110 billion dollars and Silvergate which managed 11 billion dollars.
President Joe Biden promised that “taxpayer money” would not be part of the plan and that he was committed to “holding full responsibility for those responsible for this mess and continuing our efforts to strengthen supervision and regulation of larger banks so that we are not in this situation again.”
The quick rescue plan was made against the background of pressure from the technology sector and venture capital investors who claimed that the banks should be helped quickly. According to them, this is necessary to prevent further panic and the spread of systemic risk. Among other things, investor David Sachs called on regulators to immediately guarantee the return of all deposits, and Jason Kalkanis warned of the spread of chaos.
In practice, the three banks are small enough to not be included under the watchdog of the regulators, a regulatory relief that the banks themselves pushed for implementation. Also, the three banks provide a niche service to the technology sector – a significant sector indeed, but it is difficult to estimate that the loss of a small proportion of deposits would have led to a systemic risk.
Democratic Senator Elizabeth Warren wrote yesterday in an opinion piece in the New York Times that “Banks like SVB have been given relief from stricter requirements, while basing their claims on the ridiculous assertion that they are not large and therefore do not need strong supervision. Regulators have said that the banks, not the taxpayers, will bear the cost of the federal hold-up To protect deposits. We’ll see if that’s true. But it’s no wonder the American people are skeptical of a system that keeps millions of student loan borrowers in limbo, but steps in overnight to ensure billion-dollar crypto companies don’t lose a single dollar in deposits.”