Loans to officers, directors, principal shareholders, and related interests at Silicon Valley Bank more than tripled months before the financial institution's collapse, according to government data.
In the final quarter of 2022, loans to bank insiders totaled $219 million after just $66 million in loans was issued in the third quarter, according to Bloomberg, which added the $219 million is a record amount of loans the lender issued to insiders, going back at least two decades.
SVB, one of three U.S. lenders to fail this month, was taken over by federal regulators March 10 after investors and depositors tried to pull $42 billion in one day and it could not raise capital to shore up its finances. It was the largest U.S. bank collapse in more than a decade.
Bloomberg reported the government data did not disclose loan recipients or their purpose, and there have been no allegations of wrongdoing connected to the insider loans. But the loans likely will generate scrutiny from Congress and federal regulators investigating the bank's breakdown.
SVB had a reputation as the go-to lender for tech companies and the venture capital firms that seeded them. Bloomberg reported interest-rate hikes last year, used to stem inflation, took a toll on the lender, whose liquidity was tied up in longer-term government bonds that lost value in such an environment.
Late last year, Federal Reserve examiners noted the bank needed to improve how it tracked interest-rate risks. Bloomberg reported the firm had about $15 billion in unrealized losses at the end of the year on mortgage-backed securities that it concentrated on when rates were lower.
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