By Pete Schroeder
WASHINGTON (Reuters) - The chairman of a major U.S. banking regulator said on Tuesday that his agency is considering legal action against six former executives and 11 former directors of a Silicon Valley bank.
Federal Deposit Insurance Corp. Chairman Martin Gruenberg said in a statement that the former bank executives, who were not specifically named, were charged with "breach of duty" in mismanaging the Silicon Valley bank's portfolio before the agency's sudden collapse last spring. was taken, is considering suing.
Greenberg, a Democrat appointed by President Joe Biden, has said he plans to retire from the agency on Jan. 19. But the decision to authorize potential legal action was approved unanimously by the FDIC board, which includes both Democrats and Republicans.
The FDIC took over Silicon Valley Bank (SVB) in March 2023 after the bank reported that it had experienced a sudden run on deposits, prompting it to raise more capital to cover losses on its portfolio. need Greenberg said in his prepared remarks, which came as part of a closed-door meeting of the FDIC board, that the bank's leadership mismanaged many aspects of the bank's finances, leading to its collapse.
In an effort to prevent a widespread panic in the banking system, the FDIC was authorized to backstop all deposits in the bank, including large amounts of uninsured deposits, valued at $23 billion.
"As a result of the mismanagement ... SVB suffered billions of dollars in losses for which the FDIC as receiver has both the right and responsibility to recover," he said in his statement.
Greenberg previously testified to Congress that the FDIC was investigating possible misconduct by SVB executives.
The FDIC has taken legal action against executives of failed banks in the past. The FDIC website states that from 2008 to 2023, the agency recovered $4.48 billion from executives of failed banks through its professional liability program.