SVB’s Former CEO Says Fed, Social Media Contributed to Bank’s Collapse

The fastest pace of rate hikes by the Federal Reserve in decades combined with negative social media sentiment contributed to the failure of SVB Financial Group’s Silicon Valley Bank, said Greg Becker, former chief executive officer of the company.

“The messaging from the Federal Reserve was that interest rates would remain low and that the inflation that was starting to bubble up would only be ‘transitory,’” Becker said in written testimony prepared for a US Senate Banking Committee hearing Tuesday focused on Silicon Valley Bank and Signature Bank, both of which were seized by regulators in March. “Indeed, between the start of 2020 and the end of 2021, banks collectively purchased nearly $2.3 trillion of investment securities in this low-yield environment created by the Federal Reserve.”