Biden calls on Congress to crack down on executives of failed banks

Washington – President Biden on Friday called on Congress to give his administration the power to impose tougher penalties on senior bank executives who mismanage credit institutions as a result of multiple cases recent bank failures continues to rock the industry.

Specifically, the President is asking lawmakers to expand the powers of the Federal Deposit Insurance Corporation (FDIC) to seek compensation, including gains on stock sales, from executives of failed banks such as Silicon Valley Bank and signature bank. He also wants to improve the FDIC’s ability to ban executives from banking industry jobs when their banks fail and expand the FDIC’s ability to impose fines on executives of failed banks.

“The law limits the government’s authority to hold executives accountable,” Biden said in a statement. “When banks fail due to mismanagement and excessive risk-taking, it should be easier for regulators to recover executive compensation, impose civil penalties and again ban executives from working in the banking industry. Congress must act to impose tougher penalties on senior bank executives whose mismanagement has contributed to the failure of their institutions.”

A White House summary of the president’s motion to Congress said Mr. Biden is committed to working with lawmakers to strengthen accountability in these three areas and any other areas members can identify.

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The White House pointed to a report that the CEO of Silicon Valley Bank bought shares worth more than Sold $3 million. The White House specifically wants Congress to address such cases.

Under current law, the FDIC can bar executives from holding jobs at other banks, but only if they “willfully or persistently disregard the safety and integrity of the bank,” the White House said. The President believes this should be extended to all executives of failed banks, not just those who willfully act against the interests of the bank. Finally, the President wants to ensure that the FDIC can penalize executives of failed banks who acted merely negligently.

The Justice Department has opened an investigation in the failure of Silicon Valley Bank, law enforcement officials previously told CBS News.

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