By Pete Schroeder
WASHINGTON (Reuters) – The chairman of a serious U.S. banking regulator mentioned on Tuesday his company was contemplating authorized motion towards six former executives and 11 former administrators of Silicon Valley Financial institution.
Federal Deposit Insurance coverage Company Chairman Martin Gruenberg mentioned in a press release that the company plans to sue the financial institution’s former executives, who weren’t particularly named, due to their “failures of their duties.” homework” within the mismanagement of Silicon Valley Financial institution’s portfolio earlier than its sudden collapse final spring.
Gruenberg, a Democrat appointed by President Joe Biden, has mentioned he plans to retire from the company on January 19. However the determination to permit potential authorized motion was unanimously accepted by the FDIC board, which incorporates each Democrats and Republicans.
The FDIC purchased Silicon Valley Financial institution (SVB) in March 2023 when the financial institution suffered a sudden run on its deposits after signaling it wanted to lift extra capital to offset losses on its portfolio. Gruenberg mentioned in ready remarks to a closed-door FDIC board assembly that the financial institution’s administration mismanaged a number of elements of its funds, precipitating its collapse.
In an effort to forestall a broader panic within the banking system, the FDIC was licensed to ensure the entire financial institution’s deposits, together with giant quantities of uninsured deposits, which value its insurance coverage fund deposits roughly 23 billion {dollars}.
“On account of mismanagement…SVB has suffered billions of {dollars} in losses for which the FDIC, as receiver, has each the authority and duty to get well,” he mentioned in his press launch.
Gruenberg beforehand testified earlier than Congress that the FDIC was investigating potential misconduct by SVB executives.
The FDIC has taken authorized motion towards executives of failed banks previously. The FDIC web site says that from 2008 to 2023, the company recovered $4.48 billion from failed financial institution executives by its skilled legal responsibility program.
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