(Bloomberg) -- Facing a second day of grilling from US lawmakers, the once top executives at recently failed banks coalesced around a culprit for their firms’ spectacular collapses: social media.
Michael Roffler, whose First Republic Bank (OTC:FRCB) was acquired earlier this month by JPMorgan Chase & Co. (NYSE:JPM) in a government brokered deal after its collapse, told House Financial Services Committee subcommittees that his firm’s demise was a result of contagion. Roffler said that concern about other regional lenders spread on social media bled into First Republic.
“The panic was very real,” Roffler said before the panel on Wednesday. When pressed, Roffler refused to take the blame for the firm’s collapse.
US lawmakers, regulators and bank executives have been lamenting for weeks the extraordinary velocity of bank runs at Silicon Valley Bank and Signature Bank (OTC:SBNY). Both lenders were taken over by the government in March after rapid deposit withdrawals.
During Wednesday’s hearing, former Signature chairman Scott Shay said panic was “flooding through social media” before his bank was seized. Meanwhile, ex-SVB Chief Executive Officer Greg Becker said the role social media plays in the financial system is “something that needs to be looked into.”
Both Becker and Shay also testified Tuesday before the Senate Banking Committee; Roffler didn’t appear.
Although lawmakers have expressed similar concerns over the role social media played in recent bank failures, many seemed unmoved by the executives raising the concerns on Wednesday. Lawmakers and regulators digging into the collapses have widely blamed the executives for mismanaging risks.
“The bank failed on your watch — period,” said Ayanna Pressley, a Democrat who represents a district in Massachusetts. “You blame social media, you say similar banks experienced the same thing so it was not your fault for what happened ultimately.”