Michael Roffler, former CEO of First Republic Bank, testified before the House Financial Services Committee on Wednesday, blaming the bank’s collapse on contagion spread through social media. Roffler said that concern about other regional lenders spread on social media bled into First Republic.
Roffler’s testimony echoed that of former executives from Silicon Valley Bank and Signature Bank, who appeared before the Senate Banking Committee on Tuesday. Both Scott Shay and Greg Becker said panic was “flooding through social media” before their banks were seized.
Lawmakers and regulators have widely blamed the executives for mismanaging risks, with Ayanna Pressley, a Democrat from Massachusetts, saying “the bank failed on your watch – period”.
The role of social media in the financial system is something that needs to be looked into, and the testimony of these former executives has highlighted the need for further investigation.