Biden Calls for Tougher Penalties on Bank Execs Following Silicon Valley and Signature Bank Collapses
President Joe Biden is urging Congress to enact tougher punishments on banking executives whose mismanagement contributes to the failure of their institutions. This call comes following the recent collapse of Silicon Valley Bank and Signature Bank.
Biden said in a statement on Friday that “Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing.” He added that it should be easier for regulators to “claw back” executive pay at failed banks, as well as to impose fines and bar them from taking other jobs in the banking industry.
Biden stated that the current law does not provide sufficient means of punishing those whose negligence led to the downfall of their business, even though the FDIC is capable of placing financial penalties on bank officials who exhibit reckless behavior. The president additionally proposed that the criteria for when FDIC can prevent executives from working in other banks should be lowered by Congress. Biden argued that the bar for demonstrating that executives had exhibited “willful or continuing disregard for the safety and soundness” of their bank is set too high and should be lowered in order to make it easier to penalize those leading a firm that has been placed into FDIC receivership.
Biden’s call for more accountability follows his administration’s decision to intervene in Silicon Valley Bank and Signature Bank’s collapses last week, which he said was necessary to protect jobs and small businesses. He also noted that no losses will be borne by taxpayers.
“I’m firmly committed to accountability for those responsible for this mess,” Biden said. “No one is above the law – and strengthening accountability is an important deterrent to prevent mismanagement in the future.”
The president’s call for tougher penalties has been met with a divided response among Senate Democrats. Those who voted in favor of 2018 banking deregulations the Biden Administration is attributing to the bank crises are standing by their decisions—representing a division within the party as other members seek to reimplement the law in the wake of Silicon Valley Bank and Signature Bank’s abrupt implosions.
The White House has issued a fact sheet noting that Biden believes that “if you’re responsible for the failure of one bank, you shouldn’t be able to just turn around and lead another.
0. “Biden asks Congress to impose tougher penalties on executives of failed banks” The Washington Post, 17 Mar. 2023, https://www.washingtonpost.com/politics/2023/03/17/biden-silicon-valley-bank-federal-intervention/
1. “Biden urges ‘accountability’ for executives of failed banks” Al Jazeera English, 17 Mar. 2023, https://www.aljazeera.com/news/2023/3/17/biden-urges-accountability-for-executives-of-failed-banks
2. “Biden Wants to Expand a Federal Agency’s Power to Go After Failed Bank Execs” GovExec.com, 17 Mar. 2023, https://www.govexec.com/oversight/2023/03/biden-wants-expand-federal-agencys-power-go-after-failed-bank-execs/384135/
3. “Biden Seeks Tougher Penalties on Executives of Failed Banks” Bloomberg, 17 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-17/biden-seeks-tougher-penalties-on-executives-of-banks-that-fail
4. “Senate Democrats Who Voted For 2018 Bank Deregulations Say They Have No Regrets” Forbes, 15 Mar. 2023, https://www.forbes.com/sites/saradorn/2023/03/15/senate-democrats-who-voted-for-2018-bank-deregulations-say-they-have-no-regrets