Biden Calls on Congress to Strengthen Accountability for Bank Executives
In the wake of the collapse of Silicon Valley Bank and Signature Bank, President Joe Biden has called on Congress to enact tougher penalties for senior bank executives whose mismanagement contributes to the failure of their institutions. In a statement on Friday, the President urged Congress to strengthen accountability for those responsible for the “mess” left behind, and to make it easier for regulators to claw back compensation, impose civil penalties, and ban executives from working in the banking industry again.
The Biden administration also announced extraordinary steps to prop up billions of dollars of the bank’s deposits. Treasury Secretary Janet Yellen and President Biden have both asserted that nobody is being bailed out.
The current law limits the Federal government’s authority to hold banking leaders accountable, and Biden is firmly committed to increasing accountability for those responsible for this mess. To this end, he has called on Congress to expand the Federal Deposit Insurance Corporation’s (FDIC) oversight capabilities in four ways: allow FDIC to force executives at failed banks to forfeit previous compensation, levy civil penalties and ban those responsible from working in the industry.
Billionaire investor Warren Buffett has had multiple conversations with President Biden’s team in recent days, and is reportedly offering “guidance” to White House officials. Meanwhile, big US banks have voluntarily deposited $30 billion to stabilize First Republic Bank this week.
The Democratic lawmakers who voted alongside Republicans in 2018 to roll back key Dodd-Frank regulations, ones that would have subjected SVB to greater regulations, have yet to express regret for their 2018 decision.
Five years ago, 16 Democratic senators joined all 50 Republicans in repealing the regulations. As of this week, thirteen Democrats who are still in office have not expressed any remorse for their 2018 choice.
It is clear that Biden is committed to increasing accountability for those responsible for the Silicon Valley Bank and Signature Bank collapses. He has urged Congress to expand the FDIC’s oversight capabilities and to impose tougher penalties for senior bank executives whose mismanagement contributes to the failure of their institutions. Buffett is also offering guidance to White House officials, and big US banks have deposited $30 billion to stabilize First Republic Bank this week. It remains to be seen whether Congress will take action to implement tougher penalties for banking executives.
0. “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
1. “The White House is avoiding one word when it comes to Silicon Valley Bank: bailout” WUSF Public Media, 14 Mar. 2023, https://wusfnews.wusf.usf.edu/2023-03-13/the-white-house-is-avoiding-one-word-when-it-comes-to-silicon-valley-bank-bailout
2. “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/
3. “Warren Buffett talks banking crisis with Biden team” Fox Business, 19 Mar. 2023, https://www.foxbusiness.com/business-leaders/warren-buffett-talks-banking-crisis-biden-team
4. “Democrats Who Pushed for Financial Deregulation Seem to Have No Regrets After Silicon Valley Bank” The New Republic, 17 Mar. 2023, https://newrepublic.com/post/171240/democrats-financial-deregulation-seem-no-regrets-silicon-valley-bank