22 C
New York

Biden Asks Congress for Latest Tools to Goal Executives of Failed Banks

Published:

WASHINGTON — President Biden asked Congress on Friday to pass laws to provide financial regulators broad recent powers to claw back ill-gotten gains from the executives of failed banks and impose fines for failures.

The proposal, a response to the federal rescue of depositors at Silicon Valley Bank and Signature Bank last week, would also seek to bar executives at failed banks from taking other jobs within the financial industry.

The measures contained in Mr. Biden’s plan would construct on existing regulatory powers held by the Federal Deposit Insurance Corporation. Administration officials were still weighing on Friday whether to ask Congress for further changes to financial regulation in the times to return.

“Strengthening accountability is a crucial deterrent to forestall mismanagement in the longer term,” Mr. Biden said in an announcement released by the White House.

“When banks fail as a consequence of mismanagement and excessive risk taking, it must be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working within the banking industry again,” he said, adding that Congress would must pass laws to make that possible.

“The law limits the administration’s authority to carry executives responsible,” he said.

One plank of the proposal would broaden the F.D.I.C.’s ability to hunt the return of compensation from executives of failed banks, in response to reports that the chief executive of Silicon Valley Bank sold $3 million in shares of the bank shortly before federal regulators took it over per week ago. Regulators’ current clawback powers are limited to the most important banks; Mr. Biden would expand them to cover banks the dimensions of Signature and Silicon Valley Bank.

In a contrast with top Silicon Valley Bank officials, a senior Signature Bank executive and considered one of its board members bought shares within the firm’s stock last Friday while it was experiencing a run, regulatory filings show. Signature’s chairman, Scott Shay, bought 5,000 shares of Signature stock while considered one of its directors, Michael Pappagallo, bought 1,500 shares.

The president can also be asking Congress to lower a legal bar that the F.D.I.C. must clear to be able to bar an executive from a failed bank from working elsewhere within the financial industry. That ability currently applies only to executives who engage in “willful or continuing disregard for the protection and soundness” of their institutions. He’s similarly looking for to broaden the agency’s ability to impose fines on executives whose actions contribute to the failure of their banks.

The proposals face an uncertain future in Congress. Republicans control the House and have opposed other pushes by Mr. Biden to strengthen federal regulations. A 2018 law to roll back a number of the regulations on banking that were approved after the 2008 financial crisis passed the House and Senate with bipartisan support.

Senator Steve Daines, Republican of Montana, faulted Mr. Biden’s deal with regulation and indicated that he wouldn’t support any move to impose recent rules on the banking sector.

“What we don’t need is more onerous regulations on well-managed and sound Montana banks that didn’t fail,” Mr. Daines said in an announcement on Friday evening.

Democrats were much more vocal in supporting the decision for brand spanking new rules. The chair of the Senate Banking Committee, Sherrod Brown of Ohio, said in an announcement emailed to reporters that regulators needed “stronger rules to rein in dangerous behavior and catch incompetence.”

He added that along with executives who had failed at their duties, there must be a option to hold accountable the “regulators tasked with overseeing them.”

In a letter to the chairs of the Securities and Exchange Commission, the F.D.I.C. and the Fed, Representative Maxine Waters, a Democrat from California, asked the regulators to make use of the “maximum extent” of their current powers to carry each banks’ senior executives and board directors accountable.

She added that the Dodd-Frank law enacted after the 2008 financial crisis had given agencies more powers than that they had yet used to tie executive compensation within the financial industry to successful risk management strategies.

“While I’m moving quickly to develop laws on clawbacks and other matters arising from the collapse, it’s critical that your agencies act now to analyze these bank failures and use the available enforcement tools you will have to carry executives fully accountable for any wrongful activity,” she wrote.

sportinbits@gmail.com
sportinbits@gmail.comhttps://sportinbits.com
Get the latest Sports Updates (Soccer, NBA, NFL, Hockey, Racing, etc.) and Breaking News From the United States, United Kingdom, and all around the world.

Related articles

spot_img

Recent articles

spot_img