Biden Calls for Tougher Penalties for Bank Executives and Stronger FDIC Oversight
In the wake of the recent collapse of Silicon Valley Bank, Signature Bank, and other regional banks, President Joe Biden has urged Congress to approve measures enacting tougher punishments on banking executives if mismanagement contributed to their institutions failing.
“Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions' failing,” Biden said in a statement on Friday. “No one is above the law — and strengthening accountability is an important deterrent to prevent mismanagement in the future.”
The president believes that if those responsible for the failure of one bank should not be able to just turn around and lead another, and called for regulators to have the authority to claw back compensation from executives, impose civil penalties, and to ban executives from working in the banking industry again.
Biden also said the American banking system is safe and that customers would have access to their money, and that taxpayers would not be on the hook for the administration's actions to contain the collapse.
Big US banks have also taken action to stabilize First Republic Bank this week, with 11 of the largest U.S. banks voluntarily depositing $30 billion to avoid taxpayers picking up the bill. The effort was orchestrated by the U.S. government and included JPMorgan, Morgan Stanley, Citigroup, Bank of America, Wells Fargo, U.S. Bancorp, PNC Financial, and Truist.
Finally, the White House has called on Congress to expand the Federal Deposit Insurance Corporation’s (FDIC) oversight capabilities and its ability to levy fines, particularly against “negligent executives of failed banks when their actions contribute to the failure of their firms.” Sen. Sherrod Brown (D-Ohio) echoed the sentiment, saying, “we need stronger rules to rein in risky behavior and catch incompetence.”
With these measures, President Biden is hoping to ensure the safety of the banking system and the security of depositors’ money. Through the FDIC, individuals are insured for up to $250,000 per person, and a married couple with a small business may have up to $250,000 insured in an account in each spouse’s name, plus another $250,000 in a business account.
0. “Biden backs tougher penalties for executives of failed banks in wake of collapses” Fox Business, 17 Mar. 2023, https://www.foxbusiness.com/politics/biden-backs-tougher-penalties-executives-failed-banks-wake-collapses
1. “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/
2. “Warren Buffett ‘in talks' with White House about investing in banking sector” Daily Mail, 19 Mar. 2023, https://www.dailymail.co.uk/news/article-11877389/Warren-Buffett-talks-White-House-investing-banking-sector.html
3. “Bank Crisis: Biden Calls For Tougher Penalties For Bank Execs; SVB Financial Files For Bankruptcy” Investor's Business Daily, 17 Mar. 2023, https://www.investors.com/news/bank-crisis-yellen-speaks-to-senate-first-republic-bank-ponders-sale
4. “Biden calls for penalties for bank executives after SVB collapse – as it happened” The Guardian US, 17 Mar. 2023, https://www.theguardian.com/us-news/live/2023/mar/17/trump-mar-a-lago-staff-subpoenas-biden-ireland-us-politics-live
5. “What to know about bank deposits and the FDIC Deposit Insurance Fund” CBS News, 16 Mar. 2023, https://www.cbsnews.com/news/silicon-valley-bank-signature-bank-deposits-fdic-deposit-insurance-fund-president-joe-biden