WASHINGTON — President Joe Biden on Friday urged Congress to pass legislation that would make it easier to punish bank executives amid the collapse of Silicon Valley Bank and Signature Bank.
Biden released a statement asking Congress to make it harder for banking executives to land future jobs in the industry and said the government should be able to reclaim the compensation received by executives whose mismanagement contributed to a bank’s downfall.
“The law limits the administration’s authority to hold executives responsible,” the President said. “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.”
“No one is above the law — and strengthening accountability is an important deterrent to prevent mismanagement in the future,” he added.
Financial filings show Silicon Valley Bank CEO Greg Becker sold $3.6 million worth of the company’s shares less than two weeks before its collapse.
The news comes after Biden announced Monday the steps the government would take to ensure that those who deposited money at Silicon Valley Bank and Signature Bank would be made whole. The biggest question surrounding this development is if the President can persuade Congress to take action since Republicans took control of the House in the 2022 midterm elections.
On Thursday, Treasury Secretary Janet Yellen told lawmakers that a massive run on uninsured deposits caused the bank’s downfall. She also called for a reexamination of regulatory rules.
The downfall of Signature Bank and Silicon Valley Bank caused financial fears, prompting the Biden administration to take quick action.
“We felt that there was a serious risk of contagion that could have brought down and triggered runs on many banks,” she said. “Given that our judgment is that the banking system overall is safe and sound, depositors should have confidence in the system, and we took these actions.”