The former CEO of First Republic told House lawmakers Wednesday that his bank “was contaminated” by the widespread panic that followed the March 10 fall of Silicon Valley Bank, a development "no one" at his company could have anticipated.

“Everything changed overnight,” said Michael Roffler, in testimony before the House Subcommittees on Financial Institutions and Monetary Policy and Oversight and Investigations.

The comments from First Republic’s ex-boss were his first since US regulators seized the San Francisco lender on May 1 and sold the bulk of its operations to JPMorgan Chase (JPM). It was the nation’s second-largest bank failure and the biggest since the 2008 financial crisis.

Roffler appeared alongside former Silicon Valley Bank CEO Greg Becker and former Signature Bank Chairman Scott Shay, both of whom also testified Tuesday before the Senate Banking Committee. Signature Bank was also seized by regulators on March 12.

The question of responsibility

Lawmakers grilled the executives about their culpability for the bank failures and the money made from any stock sales, along with what might prevent such collapses from happening again.

All were asked whether they would take responsibility for the collapse of their institutions. Becker said "as CEO I think you have to take responsibility for the ultimate outcome of your institution," while Shay said "I think I did a responsible role throughout to fulfill my duties."

Roffler, when asked the same question, said "what I feel responsible for is for our colleagues each and every day, and our clients each and every day, to make sure they're taken care of and supported during this time."

Roffler said he sold roughly $1 million of First Republic stock in mid January and “just over” $1 million in the middle of November. Becker said he also sold some stock before Silicon Valley Bank's seizure, and reiterated an assertion he made Tuesday that he was not in possession of any material, non-public information. Senator Elizabeth Warren has called for an insider-trading investigation.

All three executives, including Roffler, made it clear that their banks went down due to developments beyond their control.

Roffler, in fact, said that his institution was in a strong financial position before the chaos of March and no regulator had expressed concern about its strategy, liquidity or management. His bank also knew the Fed's campaign to bring down inflation would make 2023 a challenging year and had communicated that message to investors.