A pedestrian walks by the First Republic Bank headquarters on March 13, 2023 in San Francisco, California.
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WASHINGTON — Top Democratic lawmakers pressed the Justice Department and the Securities and Exchange Commission to open a probe into whether officials involved in the failure of Silicon Valley Bank, the largest bank collapse since the 2008 financial crisis, violated civil or criminal law.
The letter, sent Tuesday by Sens. Elizabeth Warren, D-Mass. and Richard Blumenthal, D-Conn., asks for a comprehensive investigation into the Federal Deposit Insurance Corporation’s takeover of the failing bank, along with “whether senior bank executives and other key officials involved in the collapse met their statutory and regulatory responsibilities or violated civil or criminal law.”
“This was a colossal failure in asset liability risk management,” the lawmakers wrote to SEC Chairman Gary Gensler and Attorney General Merrick Garland. “However, a series of reports revealed that key SVB officials showed a pattern of risky and questionable decision making that may have contributed to the bank’s instability and collapse and the ripple effects being felt throughout the economy.”
The failure of SVB, which was the nation’s 16th largest bank, was preempted after it failed to adequately hedge against rising interest rates. The company’s tipping point came last Wednesday, when SVB announced it had sold $21 billion worth of its securities at a roughly $1.8 billion loss and said it needed to raise $2.25 billion to meet clients’ withdrawal needs and fund new lending. That news sent its stock price plunging and triggered a panic-induced wave of withdrawals from VCs and other depositors. Within a day, SVB stock had tanked 60% and led to a loss of more than $80 billion in bank shares globally.
California bank regulators shuttered SVB on Friday and the FDIC set up an intermediary bank to take over the bank’s insured deposits. By Sunday,…
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