Lawmakers want answers regarding “backscratching arrangements” between Silicon Valley Bank and tech execs.

Silicon Valley Bank collapsed, sending shockwaves throughout the tech industry. SVB was the nation’s 16th-largest bank and the second-largest to collapse. Employees quickly blamed “stupid” decisions made by bank management, and especially the CEO.

Lawmakers are concerned there were other factors, however, specifically an overly-cozy relationship between the bank and the tech execs it served.

Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez have sent a letter to 14 of SVB’s largest depositors asking for information regarding the bank’s “coddling” and “white glove” treatment of its biggest clients.

Silicon Valley Bank’s unusually cozy relationship with its clients increased the threat of contagion when the bank went under,” said Senator Elizabeth Warren. “The American people deserve to know how these mutual backscratching arrangements developed, who benefitted from them, and what role they played in Silicon Valley Bank’s failure.”

“These large balances meant that the vast majority of SVB’s deposits were uninsured by the Federal Deposit Insurance Corporation (FDIC), increasing the threat of systemic contagion if regulators had failed to step in to guarantee all accounts,” wrote the lawmakers. “Congress, bank regulators, and the public are owed an explanation for the bank’s hyper-reliance on tech industry firms and investors, the extent to which this resulted in an abnormally high percentage of deposits that were not insured by FDIC, and the role that companies like yours might have played in precipitating the $42 billion single-day-run on SVB.”

Of particular concern is the “mutual backscratching arrangements” that saw SVB cater to VCs.

“SVB directly invested in startups and venture funds, ‘provid(ed) lower-interest-rate mortgages for [tech start-up] founders whom other banks wouldn’t lend to,’ gave VC firms lines of credit that allowed them to wire money to their tech startups faster, and sponsored industry ski trips, conferences, and fancy dinners,” wrote the lawmakers.

Ultimately, the relationship between tech execs and SVB may have made its collapse worse, limiting or eliminating any chance of saving the bank.

“If these deposits were made by company executives and allowed by corporate boards in exchange for personal perks, that behavior raises potential concerns about whether they were meeting their fiduciary duties,” concluded the lawmakers. “According to an FDIC official, the mutually beneficial relationship between SVB and the VC and tech industry may have also undermined regulators’ efforts to sell SVB following its failure, as ‘banks had little time that weekend to get comfortable with SVB’s books, particularly when its borrowers and depositors were so closely intertwined.’”

The lawmakers’ letter certainly paints a picture of a bank that was playing fast and loose with regulations, creating unnecessary risk while avoiding accountability.