Biden Calls For Crackdown On Senior Bank Executives

On Friday, President Obama asked Congress to raise penalties for senior bank executives responsible for overseeing the collapse of their companies.

Silicon Valley Bank, one the largest US financial institutions, collapsed last Wednesday after depositors ran to withdraw their funds following heavy losses in its long-term bond portfolio. The Federal Deposit Insurance Corporation now manages Silicon Valley Bank’s holdings. California state regulators shut it down on March 10. Signature Bank in New York was also closed on Sunday.

Biden claimed that Congressmen should have more federal authority. “hold senior management accountable when their banks fail” Or enter into the FDIC’s control. White House officials stated that the government-backed corporation should be given additional powers to seize executive pay and benefits. They cited the fact that Greg Becker was the Silicon Valley Bank CEO before the bank collapsed.

“The FDIC only has clawback authority under the Dodd-Frank Act’s special resolution authority, which applies to the very largest financial institutions,” The White House released a statement. “That authority should be extended to cover a broader set of large banks, including banks the size of Silicon Valley Bank and Signature Bank.”

If bank executives engage in illegal activities, current law permits the FDIC to ban them from being offered new positions at another bank. “willful or continuing disregard for the safety and soundness” Their institution. High-ranking officials from the administration called lawmakers to “strengthen this tool by lowering the legal standard for imposing this prohibition,” Expand the FDIC’s authority to collect fines on executives “when their actions contribute to the failure of their firms.”

After the collapse of Silicon Valley Bank, and Signature Bank, President Joe Biden promised that he would not let them down. “the American people and American businesses can have confidence that their bank deposits will be there when they need them.” Janet Yellen, Treasury Secretary, stated that on Thursday financial authorities would protect uninsured bank deposits whose failure might be detrimental. “create systemic risk and significant financial and economic consequences.” Senator James Lankford (R,OK) had pressed Yellen to determine if uninsured deposits were allowed at his state’s community banks “regardless of their size” It would be “fully insured.”

While the current $250,000 threshold is sufficient for most people, businesses like Silicon Valley Bank tend to retain higher amounts to pay their employees and conduct operations. Rep. Maxine Wassers (D.CA), and Sen. Elizabeth Warren(D.MA), have suggested that Congress reconsider the $250,000 threshold.

Warren introduced legislation that would also repeal portions of Economic Growth, Regulatory Relief and Consumer Protection Act, which was signed into law by former President Donald Trump. This act was intended to decrease oversight for banks holding assets between $50 and $250 billion.

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“The FDIC was forced to rush in to take over two failing banks, Silicon Valley Bank and Signature Bank, and then take extraordinary actions to protect those banks’ customers and prevent the contagion from spreading throughout the economy,” She commented. “If Congress and the Federal Reserve had not rolled back key provisions of Dodd-Frank, these banks would have been subject to stronger liquidity and capital requirements to help withstand financial shocks.”

“From Biden calls for a crackdown on senior bank executives“

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