'Go Get More Yield': Ex-SVB Executive Says CFO Pushed Riskier Investment Strategy
By CU Today Staff —
SAN FRANCISCO—A former Silicon Valley Bank executive testified he felt pressure from the bank’s then-CFO to chase “more yield” by adding riskier assets to SVB’s securities portfolio, according to Law360, testimony that goes directly to the FDIC’s claim that bank leaders knowingly loaded the institution with interest-rate risk before its 2023 collapse.
Law360 reported that David Busch, SVB’s former head of corporate investments and capital markets, gave the testimony in a deposition shown Monday during the second week of a California federal bench trial before U.S. District Judge Beth Labson Freeman. The FDIC has alleged SVB executives and directors mismanaged the bank’s assets by overexposing it to long-term, fixed-rate securities and unwinding hedges even as interest rates were rising.
The testimony follows earlier trial reporting by American Banker, which said the FDIC is seeking to use the case to show SVB’s leadership took undue risk to maximize short-term profits, including placing more than $115 billion into long-term securities, removing interest-rate hedges and approving a $294-million dividend to the parent company before the bank failed.
Reuters has reported the FDIC sued 17 former SVB executives and directors, including former CEO Gregory Becker and former CFO Daniel Beck, alleging gross negligence and breach of fiduciary duty. In its complaint, the FDIC said SVB’s leaders ignored prudent banking standards and the bank’s own risk policies, leaving it heavily exposed to long-term Treasuries and mortgage-backed securities as rates rose.
The FDIC has said SVB’s collapse cost the Deposit Insurance Fund an estimated $23 billion. CUToday previously reported, citing Law360, that an FDIC banking expert testified he “would’ve been fired” for running a bank with SVB’s risk profile, underscoring how the trial has become a broader test of whether failed-bank leaders can be held liable for balance-sheet decisions made before a rapid depositor run.
Originally reported by CU Today.