President Biden is calling on Congress to give regulators the authority to withhold executive compensation in the wake of a string of bank failures.
“When banks fail because of mismanagement and excessive risk-taking, it is easier for regulators to withhold compensation from executives, impose civil penalties, and bar executives from ever working in the banking industry again,” Biden said in a statement. Needed.”
“Congress should act to impose tougher penalties for senior bank executives whose mismanagement contributed to the failure of their institutions.”
Biden's comments came after the president said on Monday “no one is above the law” and those responsible for failures should be held accountable.
Senate Banking Committee Chairman Sherrod Brown (D-OH) is also calling for tighter regulations to rein in risky behavior by banks, and said he and the committee will look into ways to hold officials accountable.
“We need stronger regulations to rein in risky behavior and catch inefficiency,” Brown said. “Our job on our committee is to oversee, and we will look at all the ways we can protect working families money from risky bets that didn't pay off in Silicon Valley or on Wall Street.”
Waters calls on regulators to end ‘long overdue' process
Ranking Member of the House Financial Services Committee Rep. Maxine Waters (D-CA) also sent a letter Friday to Fed Chair Jay Powell, FDIC Chairman Martin Gruenberg and SEC Chairman Gensler urging them to use the full extent of their authority to hold the Silicon Valley bank . Signature Accountable to the officers of the Bank.
Waters also urged regulators to explore his ability to withhold compensation.
“I ask that any punitive action consider the profits or gains these executives may have made by selling their stock in the days and weeks following the bank's failures, whether through 10b5-1 plans, direct sales, or through broker sales.” Be it through discretionary accounts, derivatives or through hedging activities,” the letter reads.
Waters also said that she is working to create and develop legislation for Congress to advance President Biden's direction.
“Your agencies should complete long-pending rule-making this year and ensure that it includes a stronger clawback requirement and consider taking further measures to allow officers to receive larger bonuses,” the letter said. not be rewarded with.”
Along with Waters, Senator Elizabeth Warren (D-MA) also called for the clawback of executive compensation earlier this week. Both have blamed the Trump-era rollback of capital requirements for small and medium-sized banks for the bank failures. Warren, along with Representative Katie Porter (D-CA), has introduced legislation to repeal those changes.
These actions come as reports surfaced that the CEO of the Silicon Valley bank liquidated stock and stock options just weeks before the bank's failure.
Officials are trying to let the failure of Silicon Valley Bank and Signature Bank ripple through the banking system and infect other banks.
Late last Sunday, the Treasury Department, along with the FDIC and the Federal Reserve, announced it would freeze all deposits at Silicon Valley Bank, as well as seize Signature Bank, as a crackdown on the financial system shook markets.
Treasury Secretary Yellen said during testimony before the Senate Finance Committee on Thursday that policymakers need to examine the liquidity requirements needed for a bank with such a heavy reliance on uninsured, movable deposits.
Click here for latest economic news and economic indicators that will help you with your investment decisions
Read the latest financial and business news from Yahoo Finance