The Justice Department has started a inquiry into the sudden collapse of Silicon Valley Bank. Federal prosecutors are starting to ramp up a probe into the doomed bank days after a bank run led to its swift collapse. In response, the the Biden administration took extraordinary measures to shore up billions of dollars in deposits to contain contagion from spreading across the banking sector, NPR reports. While the exact nature of the investigation remains unclear, a formal DOJ announcement is expected in the coming days. Former federal prosecutors say one area that may intrigue Justice lawyers involves shares sold by top company executives before the bank imploded. Silicon Valley Bank CEO Greg Becker sold $3.6 million of company stock two weeks before the bank reported massive losses in the run up to the bank's implosion.
"A top company executive engaging in a significant financial transaction so close to a cataclysmic event makes sense as something that would be interesting to prosecutors," said Tamarra Matthews Johnson, a former Justice Department lawyer. The sale has triggered new scrutiny of Becker and prompted some politicians to call for him to give the money back. Becker has not been accused of any wrongdoing in connection with the stock sale. On Friday, the Federal Deposit Insurance Corporation seized the bank, which had some $175 billion in deposits. The bulk of the accounts were uninsured. Federal deposit insurance generally guarantees up to $250,000. Treasury officials intervened and waived the cap in order to backstop depositors with an insurance fund backing up bank fees. Although officials said the plan to rescue the bank did not include taxpayer money, and did not help the bank's management or investors, experts have called the intervention a bailout.