The Federal Deposit Insurance Corporation (FDIC) had to spend a whopping $31.6 billion to protect customers at three failed banks in early 2023. This massive bailout was shouldered by taxpayers, while the CEOs of the three banks walked away with millions in compensation just before their institutions collapsed, as reported by the Government Accountability Office on February 20.
First Republic Bank CEO James Herbert II received a staggering $17.8 million in compensation in 2021. Similarly, Silicon Valley Bank CEO Greg Becker was awarded $9.9 million in 2022, and Joseph DePaolo of Signature Bank received $8.7 million in the same year. Despite having base salaries below $1.2 million, these CEOs managed to boost their earnings through performance-based incentives, primarily in the form of stock options.
Interestingly, all three CEOs sold off significant portions of their stock in the two years leading up to their banks’ failures. Between 2021 and 2023, Herbert II sold $52.9 million of his stock, DePaolo sold $39.8 million, and Becker sold $30.7 million. Shockingly, Herbert II and Becker continued selling stock in the first quarter of 2023, mere weeks before their banks went under, pocketing $5.5 million and $3.6 million, respectively.
Moreover, each of the banks had at least four other executives earning more than $1 million per year. The failure of these banks marked the three largest bank closures in U.S. history, excluding Washington Mutual’s collapse in 2008. The FDIC had to reimburse depositors with $16.1 billion for Silicon Valley Bank, $13 billion for First Republic Bank, and $2.5 billion for Signature Bank.
Former Vice President Mike Pence criticized the bailout, pointing out that American taxpayers were also covering the losses of foreign businesses, including Chinese companies that were customers of Silicon Valley Bank. Senator Sherrod Brown highlighted the disparity between the consequences faced by workers and the executives who profited, stating, “Only in corporate boardrooms can you run your business into the ground, take the whole economy along with you and come out ahead.”
In conclusion, the situation raises concerns about the accountability of corporate executives and the impact of their actions on the economy. The disparity between the financial burden on the government and the rewards reaped by the CEOs underscores the need for stricter regulations and oversight in the banking sector.
This article was syndicated with permission from RealClearWire.
