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.”
House Financial Services Ranking Member Maxine Waters is also working on legislation to strengthen the administration's officers.
Waters, along with Senator Elizabeth Warren (D-MA), has called for the return of executive compensation. 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 came in the wake of reports that the CEO of a Silicon Valley bank had cashed out stock and stock options 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 that remains afloat with its heavy reliance on uninsured 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