The Federal Deposit Insurance Corporation (FDIC) recently had to spend a whopping $31.6 billion to protect customers at three failed banks in early 2023. While taxpayers bore the brunt of this financial burden, it was revealed that the CEOs of these banks managed to walk away with millions in compensation just before their institutions collapsed.
According to a report from the Government Accountability Office (GAO) dated February 20, 2025, it was disclosed that James Herbert II, the CEO of First Republic Bank, received a staggering $17.8 million in compensation in 2021. Similarly, Greg Becker, the CEO of Silicon Valley Bank, was awarded $9.9 million in 2022, while Joseph DePaolo of Signature Bank received $8.7 million in the same year.
Interestingly, despite having base salaries below $1.2 million, these CEOs managed to boost their earnings significantly through performance-based incentives, mostly in the form of stock in the bank. The GAO further revealed that all three CEOs sold off substantial portions of their stock in the two years leading up to the banks’ failures. Herbert II sold $52.9 million of his stock, DePaolo sold $39.8 million, and Becker sold $30.7 million.
Even more alarming was the fact that Herbert II and Becker continued to sell off stock in the first quarter of 2023, mere weeks before their banks shut down. They pocketed $5.5 million and $3.6 million, respectively, during this period. Additionally, each bank had at least four other executives earning over $1 million per year, as per the GAO report.
The bank failures in question were among the largest in U.S. history, second only to Washington Mutual’s closure in 2008. The FDIC had to reimburse depositors a total of $31.6 billion, with Silicon Valley Bank accounting for $16.1 billion, First Republic Bank for $13 billion, and Signature Bank for $2.5 billion. Notably, the FDIC also reimbursed several foreign businesses, prompting criticism from former Vice President Mike Pence about bailing out failing companies.
During a 2023 Congressional hearing, Senator Sherrod Brown called out the CEOs for their actions, stating, “You were paying out bonuses until literally hours before regulators seized your assets. Workers face consequences, executives ride off into the sunset. 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 disparity between the financial losses incurred by the government and the substantial earnings of the bank executives raises serious concerns about accountability and corporate governance. The situation underscores the need for greater oversight and regulation to prevent such instances of financial mismanagement in the future.
