Most Americans alive today remember the “Great Recession” of 2007-08 and know just how close the country came to total economic collapse, thanks to bad banking business practices.
In the aftermath of that near-disaster, Democrats passed legislation they claimed would prevent any similar incidents in the future. Sen. Elizabeth Warren (D-Mass.) stumped for and got a new federal bureaucracy called the Consumer Financial Protection Bureau whose job it was to continually monitor banking institutions to head off any hint of trouble before it got out of hand.
Well, here we are again, roughly 15 years later, and viola: We are once again on the cusp of another major financial meltdown as one major bank after another has begun to collapse. And one of them, Silicon Valley Bank in California, the 16th largest in the country, did something so egregious before being taken over by the FDIC on Friday that it warrants potential criminal charges.
Despite concerns of a potential market meltdown, Treasury Secretary Janet Yellen stated on Sunday that the federal government has no plans to rescue the bank, which collapsed after experiencing a 60 percent drop in shares, the UK’s Daily Mail reported. That triggered a run on the bank, as worried customers withdrew their funds.
With $209 billion in total assets at the end of 2022, SVB’s failure is the most significant financial institution collapse in the US since 2008, the report said.
As for Yellen, she claimed that there would not be another bailout but then in the same breath said the Biden regime was “focused on the needs” of depositors at the bank, the vast majority of whom had more than the FDIC-insured limit of $250,000 in their accounts — so, isn’t taking care of those “needs” akin to a bailout?
Asked whether the government might bail out banks as it did during the 2008 crisis, @SecYellen says, “We’re not going to do that again.” But she adds, “We are concerned about depositors and are focused on trying to meet their needs.” pic.twitter.com/sg5WBFWfPj
— Face The Nation (@FaceTheNation) March 12, 2023
“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out… and the reforms that have been put in place means we are not going to do that again,” she told NBC’s “Face the Nation” on Sunday. “But we are concerned about depositors, and we’re focused on trying to meet their needs.”
According to CNBC, the timing of the collapse of Silicon Valley Bank coincided with the payment of annual bonuses to its employees, which had been scheduled for the second Friday of the month. The bank’s employees in Santa Clara reportedly received their bonuses just hours before the bank’s collapse, as these payments had already been processed in the days leading up to the event.
The exact amount received by the 8,500+ employees of Silicon Valley Bank for their 2022 work is unknown at this time. However, according to Glassdoor, bonuses for SVB employees can range from $12,000 for associates to $140,000 for managing directors. It is worth noting that SVB was the highest-paying publicly traded bank in 2018, with an average employee compensation of $250,683, the financial news outlet reported.
Also, as per earlier reports, former CEO Greg Becker sold $3.57 million worth of stock in a pre-planned automated sell-off just two weeks before Silicon Valley Bank’s collapse. Becker sold a total of 12,451 shares at an average price of $287.42 per share on February 27th. Additionally, CFO Daniel Beck also sold 2,000 shares at a price of $287.59 per share, resulting in a sale of $575,000 worth of shares, the Daily Mail noted.
“Financial institution executives…warn that the federal government only has until Monday morning to find a prospective buyer for the failed bank before other small, regional banks may feel the effects,” the outlet added.