WASHINGTON—President Biden called on Congress to pass legislation to impose tougher penalties on bank executives who are deemed responsible for the collapse of financial institutions.
The administration is seeking to shore up confidence in the banking system, after the collapse of two medium-size firms and a bank-led rescue for a third.
“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,” Mr. Biden said in a statement.
The president said the administration doesn’t currently have the authority it needs to hold executives accountable, adding that Congress must act.
The White House urged Congress to expand the Federal Deposit Insurance Corp.’s authority to claw back compensation from executives at failed banks. It also called for greater FDIC authority to prevent executives from holding jobs in the banking industry and expanded FDIC authority to impose fines on executives.
Top officials are seeking to contain the failure of two midsize lenders, Silicon Valley Bank and Signature Bank, which regulators said posed a threat to the financial system.
In response, the Federal Reserve, Treasury Department and FDIC rolled out emergency assistance for banks on Sunday in the form of a new Fed lending facility, while saying all depositors at the two failed firms would be made whole, rather than the standard $250,000. The moves were meant to calm customers worried about the safety of their uninsured deposits.
Mr. Biden has said he would push for action from regulators and lawmakers to improve banking rules. Friday’s statement stopped short of calling for changes to banking laws, but administration officials said they expect to weigh in on that issue soon.
Lawmakers are considering efforts to strengthen banking rules. Sen. Elizabeth Warren (D., Mass.) and Rep. Katie Porter (D., Calif.) proposed legislation that would revive financial regulations from the 2010 Dodd-Frank law that were rolled back during the Trump administration. Mr. Biden hasn’t endorsed that bill, but White House press secretary
Karine Jean-Pierre
said on Thursday that the administration was encouraged by the effort.
Sen. Elizabeth Warren (D., Mass.) seeks to revive financial regulations from the 2010 Dodd-Frank law.
Photo:
andrew caballero-reynolds/Agence France-Presse/Getty Images
Write to Andrew Restuccia at andrew.restuccia@wsj.com and Andrew Ackerman at andrew.ackerman@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
WASHINGTON—President Biden called on Congress to pass legislation to impose tougher penalties on bank executives who are deemed responsible for the collapse of financial institutions.
The administration is seeking to shore up confidence in the banking system, after the collapse of two medium-size firms and a bank-led rescue for a third.
“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,” Mr. Biden said in a statement.
The president said the administration doesn’t currently have the authority it needs to hold executives accountable, adding that Congress must act.
The White House urged Congress to expand the Federal Deposit Insurance Corp.’s authority to claw back compensation from executives at failed banks. It also called for greater FDIC authority to prevent executives from holding jobs in the banking industry and expanded FDIC authority to impose fines on executives.
Top officials are seeking to contain the failure of two midsize lenders, Silicon Valley Bank and Signature Bank, which regulators said posed a threat to the financial system.
In response, the Federal Reserve, Treasury Department and FDIC rolled out emergency assistance for banks on Sunday in the form of a new Fed lending facility, while saying all depositors at the two failed firms would be made whole, rather than the standard $250,000. The moves were meant to calm customers worried about the safety of their uninsured deposits.
Mr. Biden has said he would push for action from regulators and lawmakers to improve banking rules. Friday’s statement stopped short of calling for changes to banking laws, but administration officials said they expect to weigh in on that issue soon.
Lawmakers are considering efforts to strengthen banking rules. Sen. Elizabeth Warren (D., Mass.) and Rep. Katie Porter (D., Calif.) proposed legislation that would revive financial regulations from the 2010 Dodd-Frank law that were rolled back during the Trump administration. Mr. Biden hasn’t endorsed that bill, but White House press secretary
Karine Jean-Pierre
said on Thursday that the administration was encouraged by the effort.
Sen. Elizabeth Warren (D., Mass.) seeks to revive financial regulations from the 2010 Dodd-Frank law.
Photo:
andrew caballero-reynolds/Agence France-Presse/Getty Images
Write to Andrew Restuccia at andrew.restuccia@wsj.com and Andrew Ackerman at andrew.ackerman@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8