Frank claimed that the New York bank was hit with a run generated by ‘the nervousness and beyond nervousness from SVB and crypto.’ The bank’s digital assets business made it the ‘unfortunate victim of the panic that really goes back to FTX.’
With reference to the Sunday night closure, Barney Frank went on to say, ‘We were fine until the last couple of hours on Friday.’ Sorry, Barney. If you were only fine until late Friday, that means you were never fine to begin with. That’s risk management 101.
Other corrupt facets of the SVB collapse are breaking daily. It’s reported that top insiders of SVB sold millions of dollars of SVB stock over the course of January and February ahead of the recent disclosures. Did they see this meltdown coming?
One of those insiders was the CEO of SVB, Gregory Becker. As noted above, Becker sold US$3.5 million of SVB stock on 27 February 2023, just two weeks ahead of the collapse.
Becker was on the board of the Federal Reserve Bank of San Francisco, which was the primary supervisor of SVB. In effect, Becker was regulating his own bank.
His name abruptly disappeared from the Fed website on 10 March, the same day SVB was taken over by the FDIC.
The Fed had just weathered an insider trading scandal in 2022 when it was revealed that several Fed Governors and Presidents of regional Federal Reserve Banks had engaged in insider trading using information gained about the extent of the pandemic in 2020.
Becker’s sales of SVB stock ahead of the meltdown look like more of the same insider trading by Fed officials.
It gets worse.
The President of the Federal Reserve Bank of San Francisco is Mary Daly. What was she doing in the weeks ahead of the SVB collapse? She was engaged in activism related to climate change, George Floyd, Black Lives Matter (BLM), LGBTQ plus rights, and other woke social justice causes.
The New York Post describes Daly as the ‘poster child’ for the trend toward wokeness instead of competence in banking officials. Post reporter Paul Sperry wrote, ‘Daly has no background in banking or managing risk’, although she makes US$422,000 per year as a bank supervisor.
Her only claim to fame is that she was the ‘first openly gay’ regional Fed bank president as if that has anything to do with risk management.
In the end, we have the SVB CEO dumping his stock ahead of the crash while serving on the board of his own lead regulator, the San Francisco Fed…while the President of that Fed bank, with no experience in risk management, was promoting climate change and BLM.
This is deeply corrupt and incompetent. Perhaps the only surprise is that SVB didn’t collapse sooner.
As various investigations and hearings proceed, we’ll learn more about the corruption and conflicts surrounding this collapse.
Strategist, The Daily Reckoning Australia