President Biden on Friday asked Congress to impose legal and financial penalties on executives of failed banks following the collapse of two of the three largest US banks.
The president said lawmakers should pass legislation that would make it easier for regulators to impose civil sanctions on executives, ban them from working in the banking sector again and seek compensation.
He added that the law expands the powers of the Federal Deposit Insurance Corp. should expand to hold accountable the heads of failed institutions.
“No one is above the law — and strengthening accountability is an important deterrent to preventing future mismanagement,” Biden said in a statement.
“Congress must act to impose tougher penalties on senior bank executives whose mismanagement contributed to the failure of their institution,” the statement continued.
After regulators shut down Silicon Valley Bank and Signature Bank this week in a bid to prevent financial chaos, Senate Democrats have been pushing for tougher penalties for bank executives whose actions contribute to a collapse.
The president’s call also comes a day after some of the country’s biggest financial institutions orchestrated a $30 billion bailout of First Republic, a mid-tier bank struggling to stay solvent.
Massachusetts Democrat Sen. Elizabeth Warren has led the charge, arguing that Trump-era rollbacks in banking regulation allowed executives at SVB and Signature to make risky investments with weak oversight.
In a New York Times op-ed, Ms. Warren called out Greg Becker, ex-CEO of SVB, who earned $9.9 million in compensation last year, and Joseph DePaolo, the former head of Signature Bank, who earned $8.6 million in compensation took home, out. She said those amounts should be reclaimed along with bonuses for other executives at the two banks.
Ms. Warren said this week that 16 Democratic senators and 31 members of the Democratic House of Representatives are backing bills that would reverse the Trump administration’s relaxation of banking regulations and impose tougher penalties on bank executives.
House Republicans say relaxing standards in 2018 isn’t the problem. Instead, they argued that regulators were asleep at the wheel and not flagging questionable investments. They also accuse bank managers of prioritizing left-wing concerns over investments that would bring financial returns to investors.
Source : www.washingtontimes.com