Biden calls for penalties on executives of failed banks
US government regulators should be able to levy fines against executives from collapsed banks, take back their compensation and bar them from continuing to work in the financial industry, Joe Biden said on Friday.
He called on Congress to pass legislation that would expand the powers of the Federal Deposit Insurance Corporation (FDIC) – the Washington agency that insures bank deposits – to hold the leaders of collapsed financial institutions like Silicon Valley and Signature banks accountable.
“No one is above the law – and strengthening accountability is an important deterrent to prevent mismanagement in the future. The law limits the administration’s authority to hold executives responsible. When banks fail due to mismanagement and excessive risk taking, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again,” the president said in a statement.
“Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing.”
The president’s call comes after a week where the Biden administration acted forcefully to shore up the US financial system following the collapses of three banks in a matter of days. On Thursday, the government collaborated with some of the nation’s largest financial institutions to organize the $30bn rescue of First Republic, a medium-sized bank that was struggling to stay solvent.