President Biden is calling on Congress to give regulators the authority to clawback executive compensation in the wake of a string of bank failures.
“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,” Biden said in a statement.
“Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing.”
Biden’s comments come after the president said Monday “no one is above the law” and those responsible for the failures should be held accountable.
Senate Banking Committee Chair Sherrod Brown (D-OH) is also calling for stronger rules to rein in risky behavior by banks, and said he and the committee will look at ways to hold executives accountable.
“We need stronger rules to rein in risky behavior and catch incompetence,” said Brown. “Our job on our committee is oversight, and we will be looking 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 authorities.
Waters along with Senator Elizabeth Warren (D-MA), have called for clawbacks of executive compensation. Both have blamed a Trump-era rollback of capital requirements for small and mid-sized banks for the bank failures. Warren, along with Rep. Katie Porter (D-CA), has introduced legislation to repeal those changes.
The actions come as reports surface that Silicon Valley Bank’s CEO cashed out of stock and stock options just weeks before the bank failure.
Officials are trying to contain problems from the failure of Silicon Valley bank and Signature Bank from rippling through the banking system and infecting other banks.
Late last Sunday night, the Treasury Department, along with the FDIC and Federal Reserve, announced it would backstop all deposits at Silicon Valley Bankas well as seize signature bankas cracks in the financial system rocked markets.
Treasury Secretary Yellen said during testimony before the Senate Finance Committee on Thursday Policymakers need to examine the liquidity requirements needed for a bank with such heavy reliance on uninsured deposits that are runnable.
Read the latest financial and business news from Yahoo Finance