As Silicon Valley Bank deteriorated late last year and regulators began internally flagging flaws in its risk management, the lender opened up the credit spigot to one group: insiders, Bloomberg News reported. Loans to officers, directors and principal shareholders, and their related interests, more than tripled from the third quarter last year to $219 million in the final three months of 2022, according to government data. That’s a record dollar amount of loans issued to insiders, going back at least two decades. The surge in loans to high-up figures may draw scrutiny as the Federal Reserve and Congress investigate the breakdown of Silicon Valley Bank, the biggest U.S. bank collapse in more than a decade. The firm — one of three U.S. lenders to fall this month — collapsed after investors and depositors tried to pull $42 billion in a single day and it failed to raise capital to shore up its finances. The government reports don’t disclose loan recipients or their purpose, and there have been no allegations of wrongdoing connected to the insider loans.
