Washington — President Biden on Friday referred to as on Congress to provide his administration the authority to impose harder penalties on senior financial institution executives who mismanage lending establishments because the fallout from a number of recent bank failures continues to rattle the trade.
Particularly, the president is asking lawmakers to develop the Federal Deposit Insurance coverage Company’s (FDIC) authority to get better compensation, together with beneficial properties from inventory gross sales, from executives at failed banks like Silicon Valley Bank and Signature Financial institution. He additionally desires to enhance the FDIC’s potential to bar executives from holding jobs within the banking trade when their banks enter receivership and develop the FDIC’s potential to deliver fines in opposition to the executives of failed banks.
“The legislation limits the administration’s authority to carry executives accountable,” Mr. Biden stated in an announcement. “When banks fail as a consequence of mismanagement and extreme danger taking, it needs to be simpler for regulators to claw again compensation from executives, to impose civil penalties, and to ban executives from working within the banking trade once more. Congress should act to impose harder penalties for senior financial institution executives whose mismanagement contributed to their establishments failing.”
A White Home abstract of the president’s request to Congress stated Mr. Biden is keen to work with lawmakers to strengthen accountability in these three areas, and in another areas members can determine.
The White Home pointed to a report that the CEO of Silicon Valley Financial institution bought greater than $3 million price of shares simply days earlier than a financial institution run that prompted California regulators to grab the financial institution and hand over management to the FDIC. The White Home particularly desires Congress to deal with circumstances like that.
Below present legislation, the FDIC can bar executives from holding jobs at different banks, however provided that they interact in “willful or persevering with disregard for the security and soundness” of the financial institution, the White Home stated. The president thinks that ought to develop to all leaders of failed banks, not simply ones performing willfully in opposition to the financial institution’s pursuits. Lastly, the president desires to verify the FDIC can superb executives of failed banks who have been merely negligent.
The Justice Division has opened an investigation into the failure of Silicon Valley Financial institution, legislation enforcement officers beforehand advised CBS Information.
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