Biden Calls For Tougher Punishments For Bank Executives After Collapses
President Joe Biden on Friday urged Congress to enact tougher punishments for banking executives whose mismanagement contributes to the failure of their institutions, alluding to the collapse of Silicon Valley Bank and Signature Bank in recent days.
“No one is above the law – and strengthening accountability is an important deterrent to prevent mismanagement in the future,” Biden said in a statement.[0] “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.”[0]
The President believes that if you’re responsible for the failure of one bank, you shouldn’t be able to just turn around and lead another.[1] To that end, Biden has asked Congress to expand the Federal Deposit Insurance Corporation’s (FDIC) oversight capabilities in four ways.[2] He wants to allow FDIC to force executives at failed banks to forfeit previous compensation, levy civil penalties and ban those responsible from working in the industry.[1]
Biden also said the government needs to expand its capacity to hold bad actors accountable.[1] “We'll do whatever is needed” to prove “our banking system is safe,” Biden said on Monday.[3]
To further reassure the public, Warren Buffett is reportedly in talks with the Biden administration to discuss possible investment in US banks.[4] Buffett has a history of stepping in during financial turmoil, so his presence in the negotiations is a sign of confidence in the banking sector.[5]
The FDIC took over the Silicon Valley Bank’s operations following a liquidity crisis as depositors rushed to withdraw their money.[0] To help stabilize the bank, JPMorgan, Morgan Stanley, Citigroup, Bank of America, Wells Fargo, U.S. Bancorp, PNC Financial, and Truist agreed to deposit $30 billion with First Republic.[6]
Biden stressed that these banks were not being bailed out by taxpayers.[7] Individuals are insured for up to $250,000 per person, for a couple, $500,000 in total deposits would be covered by the FDIC.[8]
The President reiterated his commitment to prevent similar failures in the future.
0. “Biden backs tougher penalties for executives of failed banks in wake of collapses” Fox Business, 17 Mar. 2023, https://www.foxbusiness.com/politics/biden-backs-tougher-penalties-executives-failed-banks-wake-collapses
1. “Biden Wants to Expand a Federal Agency's Power to Go After Failed Bank Execs” GovExec.com, 17 Mar. 2023, https://www.govexec.com/oversight/2023/03/biden-wants-expand-federal-agencys-power-go-after-failed-bank-execs/384135/
2. “Biden to seek more punishments for leaders of failed banks” NewsNation Now, 17 Mar. 2023, https://www.newsnationnow.com/business/biden-wants-more-punishment-for-failed-bank-ceos
3. “Battenfeld: Bank failures fueling insecurity and angst among American voters” Boston Herald, 14 Mar. 2023, https://www.bostonherald.com/2023/03/14/battenfeld-bank-failures-fueling-insecurity-and-angst-among-american-voters/
4. “Warren Buffett ‘in talks' with White House about investing in banking sector” Daily Mail, 19 Mar. 2023, https://www.dailymail.co.uk/news/article-11877389/Warren-Buffett-talks-White-House-investing-banking-sector.html
5. “Warren Buffett talked to Biden White House about bank investment: report” Business Insider, 19 Mar. 2023, https://www.businessinsider.com/warren-buffett-white-house-investment-in-regional-banks-2023-3
6. “Bank Crisis: Biden Calls For Tougher Penalties For Bank Execs; SVB Financial Files For Bankruptcy” Investor's Business Daily, 17 Mar. 2023, https://www.investors.com/news/bank-crisis-yellen-speaks-to-senate-first-republic-bank-ponders-sale
7. “What to know about FDIC insurance and how your money is protected” ABC News, 13 Mar. 2023, https://abcnews.go.com/Business/money-fdic-protects/story?id=97831935
8. “What to know about bank deposits and the FDIC Deposit Insurance Fund” CBS News, 16 Mar. 2023, https://www.cbsnews.com/news/silicon-valley-bank-signature-bank-deposits-fdic-deposit-insurance-fund-president-joe-biden
