Sen. Elizabeth Warren's biggest takeaways from SVB, Signature Bank executives' testimonies

Yahoo Finance fiscal policy reporter Jennifer Schonberger breaks down Senator Elizabeth Warren's (D-Ma.) sentiments regarding the testimonies of Silicon Valley Bank and Signature Bank executives and her calls for further investigation into the banks' collapse and mismanagement.

Video transcript

JULIE HYMAN: In the meantime, we're also talking about banks again today. Another day, another testimony on Capitol Hill. Today it's the turn of former First Republic CEO Michael Roffler. He addresses members of the House Financial Services Committee. And we know from prepared testimony, he'll tell lawmakers everything changed overnight and that the bank was contaminated by panic in the aftermath of SVB's failure on March 10.

BRAD SMITH: And sticking with banks, our very own Jennifer Schonberger spoke with Senator Elizabeth Warren about her key takeaways from the banking hearing yesterday. Jennifer, we got to know, what did she have to say?

JENNIFER SCHONBERGER: Good morning, Brad. In the wake of JP Morgan taking over First Republic and Treasury Secretary Yellen saying regulators would be open to more bank mergers, Senator Elizabeth Warren told me in an interview Tuesday, she doesn't think mergers are the solution to stemming bank failures.

ELIZABETH WARREN: Do not need to see making too big to fail banks even bigger as the solution. It's not. We now have to understand that weak regulation has left a lot of these multibillion-dollar banks on shaky grounds. In order to put them together and create more concentration in the banking industry, that is not a happy solution. That is a bad problem made worse.

JENNIFER SCHONBERGER: Instead, Warren wants to stop bank failures by occurring in part by giving regulators more authority to claw back executive compensation. Warren, along with three bipartisan senators, has introduced a bill that would require federal regulators to claw back all or part of compensation received by bank executives if a bank failed in the five-year period preceding that failure.

Warren already has bipartisan support for her bill. And she told me she thinks her bill will get further support to pass. Meanwhile, the senator is calling for an investigation into the former CEO of Silicon Valley Bank Greg Becker and whether he engaged in insider trading.

ELIZABETH WARREN: There is enough that was said in this hearing today that there needs to be a full investigation of insider trading for Mr. Becker.

JENNIFER SCHONBERGER: During a Senate Banking Committee hearing Tuesday, Becker said he knew about the roughly 30 outstanding supervisory matters that were not disclosed to the public when he sold his stock options 11 days before SVB collapsed but said he didn't believe he was in possession of material nonpublic information. Bottom line here, Warren says this is about realigning incentives for banking executives to ensure that they're not chasing short-term profits to boost their own compensation and then keeping those profits in compensation when a bank fails. Guys.

JULIE HYMAN: Jennifer Schonberger, thank you so much. Great interview. Appreciate it.