Housing affairs will come to order. Thanks to the new deal and the hard work of our regulators today, most Bank Failures of course never a good thing or generally not a big deal but the quick collapses of Silicon Valley bank and Signature Bank were no ordinary failures. In less than a day, Silicon ValleyBank Customers pulled 42 billion dollars out of the bank fueled by Venture Capitalists and their social media accounts. They created the largest and fastest bank run in history in the following days Signature Bank lost 17 billion dollars. Regulators both republicans and democrats came to gather to prevent the panic from spreading. They increase liquidity, they promoted confidence in our Banking System, they protected deposits of customers and Small Businesses not notably the investors the investments of executives and shareholders. I spent that weekend on the phone with ohio Small Businesses and banks and credit unions. While Small Business owners simply wanted to make payroll. They did not want to see years of hard work go down the drain because of Venture Capitalists panicking on twitter 2000 miles away. One woman told me she was terrified she would not be able to pay her workers next week and i heard that story over and over. Ohio banks and credit Union Institutions institutions that are sound and well capitalized did not want to see deposits flee their institutions for the biggest wall street banks. For anyone who lived through the Global Financial crisis, its impossible not to think of 2008. Once again, Small Businesses and workers feared they would pay the price for others bad decisions. Were left with many questions and justified anger toward banking executives and boards towards Venture Capitalist, towards federal state Bank Regulators, towards policy makers. The scene of the crime does not start with the regulators before us. Instead, we must look inside the bank at the bank ceos, at the trump era banking regulators who made it their mission again to give wall street everything it wanted. Monday morning quarterback aimed only at the actions of regulators this month. Its as convenient as it is misplaced. Coming from those who never met a wall street wish list, they did not want to grant. Many who are the first to school the regulators for their failures offer ready years whenever bank seals lineup at their offices complaining about out of control Bank Examiners. Remember some of those complaints in our hearing with fed chair powell over the fed merely reviewing capital just three days before Silicon Valley bank failed . How soon we choose to forget. When we ask who shouldve known how the rest were building in these banks, we should start at the source with the executive. Silicon valley bank almost quadrupled in size over three years, Signature Bank more than doubled in that time. The principles here are not complicated. Banks should be prudently managed, mindful of the full scope of risk they face should diversify across companies and products. The committee must consider how these banks exploded in size in the way that was clearly unsustainable. Some explanations will focus on complicated sounding concepts like balance sheet, balance risk and moral hazard, stress test and liquidity ratios. Really though it comes down to more basic concepts. Hubris, entitlement, greed. Always always, always with paydays at the end for the executives at the top. The ceos own pay was tied directly to the growth of svb. And svb, executive owners were return on equity so they took more risks by buying assets with higher yields to make higher profits. When those investments started to lose money, they did not back down. It wont surprise anyone that Silicon Valley bank went nearly a year without a chief risk officer. Venture capitalist fueled the banks growth by forcing the Companies Invested in and advised to keep their money at silicon bank. And then those same vcs turned around and sparked the bank run by telling companies to pull their money out creating more chaos, more panic. Signature bank found themselves in the middle of a sand bank with a climb summary at the Crypto Exchange ftx. At the banquet them open multiple banks, they ignored red flag after red flag. Its all just a variation of the same theme. The same root cause of most of our economic problems, wealthy elites do anything to make a quick profit and pocket the rewards. When they are risky behavior leads to catastrophic failures, they turn to the government. They turn to the government asking for help expecting workers and taxpayers to pay the price. Too often workers do. Even though no taxpayers money is being used to say the deposits and i understand why americans are angry even disgusted at how quickly the government mobilize with a bunch of elites in california are demanding. And people have a pretty good sense of whose problems get taken more seriously than others in this town. Of course we have to prevent systemic threats to the economy Book Corporate trade deals are a systemic threat to towns like i grew up in mansfield ohio and across the industrial midwest. As a wall street Business Model the reward of short term process that over investment when workers . Those threats are not only tolerated, they have been actively pushed by the same crowd that this month clambered for the government to save them. Justice, there are no atheist and foxholes. It appears that when there is a bank crash, there are no libertarians in the Silicon Valley. I hope that from now on those who have no problem with Government Intervention to protect their own livelihoods will think a little bit harder about what their work version of the free market has done to workers in ohio. May be tempting to look at all this and say we do not in the new rules. The problems are with those arrogant executives. They will always be arrogant executives. That is exactly why we need strong rules. Public servants with a courage and guts to stand up to Bank Lobbyists and enforce those rules. The official sitting board knows they predecessors roll back protections like capital liquidity standards, stress test, brokered deposit limits and even be sick supervision. They greenlight at those banks to grow and grow and grow too big, too fast. There are important questions about deposing assurance we must consider whether the current amount works for everyone including Small Businesses whose real goal is to make payroll. We expect Bank Executives to understand basic principles of Bank Management to know they cannot grow a bank by over concentrating business and specialized area that pay themselves huge bonuses right up until things blow up. That is not being a trusted partner to your customers, its taking advantage of them. These executives must answer for their banks downfalls. I have called in the former ceos of those banks, those failed banks to testify. I think Ranking Member scott for joining us on that effort. They must also face real consequences for their actions. Right now, none of the executives who ran these banks into the ground are barred from taking other banking jobs. I have had their compensations clawed back. None have paid any fines. Some executives have decamped to hawaii. Others have gone to war farther banks. Some simply wandered off into the sunset. It will surprise no one in ohio that these Bank Executives face less accountability than a cashier who missed counts it cashier box. That is why it will be legislation to strengthen regularlys ability to oppose fines and penalties, to claw back bonuses, ban executives who caused Bank Failures from ever working in another bank. We need to look at Bank Regulators ability to not only identify risk and problems at banks but also be empowered to actually make the banks fix them. Today, my colleagues and i are asking g. A. O. To follow up on a 2019 report where they highlighted communication failures in the extent to which senior Bank Management fully addressed identify deficiencies. I am looking forward to hearing from our financial watchdogs today. We will be watching them to make sure they assess the damage, hold accountable of those responsible, fix what is broken. Last, i asked my colleagues to Work Together to make sure that our Financial System is stronger after this crisis. Americans have watched the same pattern over and over and over and over again. A crisis occurs, some of us push for reform, if we are lucky we are be able to seize the moment it actually passed some. But then the Bank Lobbyists go to work and they are so good at their jobs. Politicians spending suing years rolling back reforms right up until the next crisis. That crisis happens because, you guessed, it we roll back regulations in this body enabling the regulator several them back even further. We know who is the first to get help in any crisis. Its Little Wonder that workers in ohio and around the country do not trust banks. They do not trust their own government. It is time we prove them wrong. Ignore the corporate lobbyists and put workers and the families first. Senator scott . Thank you, mister chairman today, we are here to understand just how we found ourselves in the middle of the second and Third Largest bank failure in the United States history. Our questions are nowhere near answered, this is an important first step in providing transparency and accountability necessary to the american taxpayer. I would like to thank mr. Chairman for taking the time and working with me to try to bring the bank ceos in to this hearing. I think its incredibly important that we hear from the folks specifically and uniquely responsible for the failure of these banks. Folks who manage them. By all accounts, this is a classic tale of negligence and it started with the banks themselves without any question that is where the buck stops. So it is imperative that we hear straight from the horses mouth, so to speak, to find out why these banks were so apparently poorly managed and poorly managed the risks. Unfortunately, the banks ex are not the only managers listening. The secretary of the treasury and the chairman of the Federal Reserve are also not here to testify. I do not mean to offend the witnesses that are here but it is hard to believe that the Biden Administration seriously is concerned about the failure that we are seeing when they themselves are shielding the top official at the apartment of treasury. The same official that briefed the president invoked the system risk conception. Nor do we have chairman powell here. Instead, we have the vice chair of supervision here to use a committee as a platform to talk about the wrongs under his supervision. As a Federal Reserve that has already announced he is conducting a review to assess any supervisor failure which is an obvious inherent conflict of interest and a classic case of the fox guarding the henhouse. The feds should focus on the admission of the climate arena. This is a waste of time, attention and man power. All things that could have gone in to bank supervision. Banks, like any other businesses, must manage their risk and be good stewards for their customers. Unlike other businesses banks are highly regulated. Sometimes banks even have the regulators sitting in their banks and continue monitoring the risk of activities as is the case with Silicon Valley bank. For the last two and a half weeks, they have consistently described Silicon Valley as unique and highly idiosyncratic. Meaning, the warning signs should have been flashing red and svb should have stood out as what it was. Absolutely a problem child. Clear as a bill for the warning signs. In fact, reports indicate that these warning signs were all ready flashing. On march 19th, your times wrote that Silicon Valley bank risky practices were on the Federal Reserves radar for more than a year. Moreover, Silicon Valley suffered from extreme Interest Rate risks. Due to investment and long term securities, that declined in value because of soaring inflation. Of all our supervisors, the Federal Reserve should have been keenly aware of the impact Interest Rate hikes have on the value of the securities and it should have been actively working to ensure the bank it supervises would hedge their bets and covering their risk accordingly. Now we know, based off your testimony, mr. Barr, that the fed was aware. In fact, in 2021, your supervisors found deficiencies in the banks liquidity. Fits management resulting in six supervisory findings. Later in 2022, supervisors then issued three findings related to ineffective or oversight, Risk Management weaknesses and the banks internal audio function. What were the supervisors making . The law the regulations are Crystal Clear. The Federal Reserve cant take any supervisory or enforcement action it seems necessary to address unsafe and unsound practices. Recent reports confirms what we already know. Your priorities and your work with the San FranciscoFederal Reserve bank for president centered on Climate Change, the issue holding unrelated to the Federal Reserves dual mandate and the role of supervisor. Given svb social and climate agenda, one must ask, if svbs investments and climate cause regulators to be a bit more permissive of its risks for. If you cannot stay on mission and enforce the laws as they already are on the books, how can you ask congress for more authority with a straight face. To that end, i hope to learn how the Federal Reserve could know about such risky practices for more than a year and failed to take definitive corrective action. By all accounts, our regulators appear to have been asleep at the wheel for. In addition, i also hope to learn more from the fdic about the role in the receivers ship and sale of boat svb and Signature Bank especially on the auction and the due process. I am very concerned that private sector offers appear to be submitted and yet were denied. If Silicon Valley bank has been purchased before it failed, the panic and the shock to the market and the markets confidence we have seen over the past two and a half weeks may have been avoided. If Silicon Valley had been purchased over the weekend of march 10th, confidence in the marketplace may have sustained Signature Bank and prevented its failure. The fdics auction process has been a black hole for congress and the American People and we deserve answers. I know in hindsight its 2020, but when you hear rumors of this process being delayed because of the white house does not like mergers and in any shape, form or fashion, it makes you wonder what actually its going on. Sometimes when it looks like a duck, quacks like a duck, its just a duck. As i close on this Opening Statement, three things remain clear to me regarding svb. First, the bank was rife with mismanagement. Second, there was a clear supervisory failure. Our regulators were simply asleep at the wheel. Finally, President Bidens reckless spending caused high inflation and the country, as well as the bank, experience tremendous loss. Thank you Ranking Member scott. I want to introduce the three witnesses today. Martin was sworn in at the board of directors january of 2023. Michael barr took office as vice chair for supervision of the board of governors and Federal Reserve in july of 2022 for a fouryear term. He serves also as a member of course of the board of governors. Nellie liang has been the undersecretary for domestic finance, the u. S. Department of treasury since july of 2021. Thanks for all of you for joining us and if you would begin, thank you. Thank you, mister chairman. Chairman brown, Ranking Member scott, members of the committee, i thank you for the opportunity to appear before you today to address the recent Bank Failures and the federal regulatory response on march 10th, just over two weeks ago, Silicon Valley bank