Lawmakers seek details on ‘unusually cozy' ties between tech executives and SVB
This is just a short summary of the text so I hope that's okay. lawmakers sent letters to 14 of the largest depositors at Silicon Valley Bank, seeking details about the lender's relationships with its clients.
CNN New York --
Democratic lawmakers wrote to 14 of Silicon Valley Bank's largest depositors, asking for details on the lender's "unusually cozy" relationships with wealthy clients.
Senator Elizabeth Warren, Massachusetts, and Representative Alexandria Ocasio Cortez, New York, sent Sunday's letters to executives at Roku and Roblox, Circle, Circle, and BlockFi. This raises questions about the 'white glove treatment' by SVB.
Silicon Valley Bank was well-known for its support of the tech startup community. Warren and Ocasio-Cortez raised concerns, citing media reports that the bank's relationships were beyond industry standards, and could have contributed to its failure last month.
According to the New York Times's reporting, SVB provided mortgages at a lower interest rate to tech start-up founders than other banks would lend to. The lawmakers also sponsored industry conferences and ski trips.
Senator Warren stated that Silicon Valley Bank's uncomplicated relationship with its customers increased the risk of contagion after the bank collapsed. The American people should know the history of these backscratching arrangements, as well as who they benefited from and their role in Silicon Valley Bank's collapse.
A month ago, SVB was the second-largest US bank failure. After panicked depositors had pulled their funds, the federal and state regulators intervened to close the bank. The bank was able to draw down $42 billion within a single day.
The bank was more at risk of a run because the vast majority of its deposits were not insured. Depositors who have less than $250,000 in deposits are less likely to withdraw their money when they become trouble.