The greatest bank failure since the global financial crisis in 2008 was the Silicon Valley Bank failure in March. The Federal Reserve raised interest rates to combat bidenflation, but they neglected to hedge the interest rate risk, which led to individuals withdrawing their money from the banks, which was one of the causes of the crash.
I previously reported on the Senate Banking Committee meeting this week and Senator John Fetterman’s (D-PA) rambling remarks as the Senate considered the issues behind the bank collapses. The smart Senator John Kennedy (R-LA), who had no issue stating what he intended to say in an excellent interrogation of a witness, is the antithesis of the suffering Fetterman, who should resign and recuperate as fully as he can back home in Pennsylvania.
Greg Becker, the CEO of Silicon Valley Bank, was appearing before the Committee. However, he didn’t take much of the blame for the failure. He pointed the finger at everyone and everything except himself. Kennedy, however, went to town on him and called him out for making “stupid decisions” and neglecting to consider the danger.
Kennedy noted how when the Fed increased interest rates, the value of the bank’s holdings significantly decreased. “You did not have any hedges, did you?” Kennedy asked, sporting the expression of a parent who knows their child broke a dish but does not want to admit it.
Kennedy said, “You are the CEO, and…you had 55% of the assets you owned in government bonds and you do not know if you were insured or not?”
Kennedy then claimed to know the answer to that question despite not even being the CEO. Kennedy chastised him, saying that if he had purchased those safeguards, “it would’ve cut into your profits,” therefore explaining why they hadn’t done so and had become overextended. They do, in fact, cost money, despite Becker’s best efforts to avoid the truth.
“Mr. Becker, you placed a terribly foolish wager, didn’t you? And the Americans who pay taxes had to foot the bill for your idiocy, didn’t they?” Kennedy attacked him harshly. Becker made an effort to defend himself by asserting that it was the result of many “unprecedented events.”
However, if he hadn’t realized that Bidenflation would certainly result in rate increases and other potential consequences, then, yeah, that was absolutely foolish. He is suppose to be to serving as CEO.
However, Kennedy wasn’t going to let him get away with it.
Kennedy slammed him, saying, “No, this was not unprecedented. This was bone-deep, marrow-deep idiocy.”
You have to love when Senator John Kennedy makes smart people look ridiculous, just like he does Greg Becker, the former CEO of failed Silicon Valley Bank pic.twitter.com/0zjGLqlYyd
— • ?IS??I?? ™ • (@4Mischief) May 17, 2023
“You placed all your eggs in a single basket, and you could see that interest rates were increasing unless you were residing on the International Space Station,” he added.
That outlined the cause of the bank collapses in detail, and we shouldn’t be forced to make up for any of this foolishness. Nobody could have foreseen it, right? We were all capable of predicting that the rates would go up.
Author: Blake Ambrose
