Biden asks Congress to crack down on executives at failed banks
Washington — President Biden on Friday called on Congress to give his administration the authority to impose tougher penalties on senior bank executives who mismanage lending institutions as the fallout from several recent bank failures continues to rattle the industry.
Specifically, the president is asking lawmakers to expand the Federal Deposit Insurance Corporation's (FDIC) authority to recover compensation, including gains from stock sales, from executives at failed banks like Silicon Valley Bank and Signature Bank. He also wants to improve the FDIC's ability to bar executives from holding jobs in the banking industry when their banks enter receivership and expand the FDIC's ability to bring fines against the executives of failed banks.
"The law limits the administration's authority to hold executives responsible," Mr. Biden said in a statement. "When banks fail due to mismanagement and excessive risk taking, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again. Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing."
A White House summary of the president's request to Congress said Mr. Biden is eager to work with lawmakers to strengthen accountability in those three areas, and in any other areas members can identify.
The White House pointed to a report that the CEO of Silicon Valley Bank sold more than $3 million worth of shares just days before a bank run that prompted California regulators to seize the bank and hand over control to the FDIC. The White House specifically wants Congress to address cases like that.
Under current law, the FDIC can bar executives from holding jobs at other banks, but only if they engage in "willful or continuing disregard for the safety and soundness" of the bank, the White House said. The president thinks that should expand to all leaders of failed banks, not just ones acting willfully against the bank's interests. Finally, the president wants to make sure the FDIC can fine executives of failed banks who were merely negligent.
The Justice Department has opened an investigation into the failure of Silicon Valley Bank, law enforcement officials previously told CBS News.