The first bankrupt US bank executives They consider that the main culprits of the financial crisis unleashed this year were not them but social networks. Facing a second day of interrogation by the US legislatorsthe thesis of collective panic was reinforced and the argument of disastrous management wanted to be minimized.
Michael Rofflerresponsible in First Republic Bankwhich was acquired earlier this month by JPMorgan Chase & Co.. In a government-brokered deal after the bankruptcy, he told subcommittees of the House Financial Services Committee that the bank’s demise was the result of contagion. Roffler said concern unleashed by regional lenders spread on social media was what caused the First Republic crisis. “The panic was very real,” Roffler told the panel on Wednesday. When pressed, Roffler refused to take the blame for the bank’s collapse.
US lawmakers, regulators and bank executives have been lamenting for weeks the extraordinary speed with which the crisis spread in Silicon Valley Bank and in SignatureBank. The government took over both entities in March after noting that deposits were being withdrawn quickly.
investigation pending
During the hearing on Wednesday, Signature’s former chairman, Scott Shay, said panic was “flooding social media” before his bank was seized. Meanwhile, former SVB chief executive Greg Becker said the role social media plays in the financial system is “something that needs to be investigated.” Both Becker and Shay also testified Tuesday before the Senate Banking Committee; Roffler didn’t show up.
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Although lawmakers have raised similar concerns about the role social media played in recent bank failures, many seemed unconcerned that executives voiced their concerns on Wednesday. Lawmakers and regulators investigating crashes have widely blamed executives for mismanaging risk.
“The bank failed under his watch, period,” said Ayanna Pressley, a Democrat representing a Massachusetts district. “You blame social media, you say similar banks experienced the same thing, so it wasn’t your fault that ultimately happened.”