Lawmakers seek details on ‘unusually cozy’ ties between tech executives and SVB
By Allison Morrow, CNN
Democratic lawmakers sent letters to 14 of the largest depositors at Silicon Valley Bank, seeking details about the lender’s “unusually cozy” relationships with its well-heeled clients.
Senator Elizabeth Warren of Massachusetts and Representative Alexandria Ocasio-Cortez of New York sent the letters Sunday to executives at Roku, Roblox, Circle and BlockFi, among others, raising questions about their “white glove” treatment by SVB.
Silicon Valley Bank was known to cater to the tech startup world. But Warren and Ocasio-Cortez, citing media reports, raised concerns about whether the bank’s relationships went beyond industry standards and potentially hastened its collapse last month.
SVB reportedly provided lower-interest-rate mortgages for tech start-up founders whom other banks wouldn’t lend to, according to the New York Times, while sponsoring industry ski trips, conferences, and fancy dinners, the lawmakers wrote.
“Silicon Valley Bank’s unusually cozy relationship with its clients increased the threat of contagion when the bank went under,” said Senator Warren in a statement. “The American people deserve to know how these mutual backscratching arrangements developed, who benefited from them, and what role they played in Silicon Valley Bank’s failure.”
SVB became the second-largest bank failure in US history a month ago. State and federal regulators stepped in to shut the bank down a day after panicked depositors yanked their funds, drawing down $42 billion in the span of a single day.
The vast majority of the bank’s deposits were uninsured, which makes the bank more vulnerable to a run. Depositors with less than $250,000 limit set by the Federal Deposit Insurance Corporation are far less likely to draw down their money at the first sign of trouble.
™ & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.