President Joe Biden makes remarks on the United States banking system after the collapse of Silicon Valley Bank at the White House on Monday. He called on Congress Friday to give the FDIC more authority. Photo by Chris Kleponis/UPI | License Photo
March 17 (UPI) -- President Joe Biden on Friday called on Congress to get tougher on bank executives at failing financial institutions for not keeping better tabs on their businesses, which could include civil penalties and forcing them out of the industry.
Biden made the comments in a White House statement, a week after Silicon Valley Bank in California was closed and taken over by the Federal Deposit Insurance Corp. A second bank was closed afterward and scores of others show signs of weaknesses in the face of higher interest rates.
"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," Biden said in the statement.
"Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing," he said.
In a White House fact sheet released Friday, Biden called for Congress to increase the FDIC's authority to claw back compensation from executives at failed banks like Silicon Valley Bank and Signature Bank. He said those such a measure should include gains from stock sales.
"The CEO of Silicon Valley Bank reportedly sold more than $3 million worth of shares just days before the bank entered FDIC receivership," the White House said. "The president urges Congress to expand the FDIC's authorities to expressly cover cases like this."
Biden said the FDIC needs the authority to bar executives from holding jobs in the banking industry when their banks enter receivership and expanded authority to bring fines against executives of failed banks.
"Under current law, the FDIC may seek monetary penalties from bank executives who 'recklessly' engage in a pattern of 'unsafe or unsound' practices, regardless of whether that bank enters receivership.
"To help the agency fully address executive misconduct, Congress should expand the FDIC's authority to seek fines from negligent executives of failed banks when their actions contribute to the failure of their firms."