President Biden is asking Congress to give regulators the power to reclaim executive compensation after a string of bank failures.
“When banks fail because of 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,” Biden said in a statement.
“Congress must act to impose tougher penalties on senior bank executives whose mismanagement has contributed to the failure of their institutions.”
Biden’s comments come after the president said Monday “nobody is above the law” and those responsible for the mistakes should be held accountable.
Senate Banking Committee Chair Sherrod Brown (D-OH) is also calling for tougher rules to curb risky behavior by banks, and said he and the committee will look at ways to hold executives accountable.
“We need stricter rules to curb risky behavior and expose incompetence,” Brown said. “Our job on our committee is oversight, and we will look at all the ways we can protect working families’ money from risky bets that haven’t paid off in Silicon Valley or on Wall Street.”
Maxine Waters, a member of the House Financial Services Ranking, is also working on legislation to strengthen government agencies.
Waters has joined Senator Elizabeth Warren (D-MA) in calling for board compensation recoveries. Both blame lowering of capital requirements for small and medium-sized banks during the Trump era for bank failures. Warren, along with Rep. Katie Porter (D-CA), introduced legislation to reverse these changes.
The measures come as reports surface that the CEO of Silicon Valley Bank paid out shares and stock options just weeks before the bank collapsed.
Officials are trying to contain problems created by the collapse of Silicon Valley Bank and Signature Bank, which are spreading through the banking system and infecting other banks.
Late Sunday night, the Treasury Department, along with the FDIC and the Federal Reserve, announced it would freeze all deposits in Silicon Valley Bank and seize Signature Bank as cracks in the financial system rocked markets.
Treasury Secretary Yellen said during testimony before the Senate Treasury Committee on Thursday that policymakers need to consider the liquidity requirements needed for a bank that relies so heavily on uninsured deposits that are viable.
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Source : finance.yahoo.com