Biden pledges to go after salaries of failed lenders’ bosses
‘When banks fail due to excessive risk taking it should be easier to claw back compensation’
JOE Biden has called for “negligent” executives at failed US banks to face fines, industry bans and pay clawbacks.
The US President urged lawmakers to pass legislation that would allow regulators to target bosses if their actions contributed to the collapse of lenders.
His comments yesterday follow the implosions of tech-focused lenders Silicon Valley Bank (SVB) and Signature Bank, which triggered further fears for regional banks such as First Republic.
Mr Biden claimed the White House and the Federal Reserve had taken “decisive action” to stabilise the banking system after SVB’S collapse, even as First Republic faced large numbers of withdrawals and its shares plummeted.
This was despite major banks, including Jpmorgan Chase, Bank of America, Wells Fargo, Citigroup and Trust, uniting to provide an emergency $30bn (£24.6bn) funding package.
Mr Biden demanded “accountability for those responsible for this mess”, saying: “No one is above the law. 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 ban executives from working in the banking industry again. Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing.”
In a briefing note released with Mr Biden’s statement, the White House said the executives who ran SVB and
Signature Bank had been removed since the lenders were placed under the control of the Federal Deposit Insurance Corporation (FDIC).
But it said FDIC could only claw back the compensation of executives at the largest banks in the nation, with other penalties on bosses requiring proof of “recklessness” or acting with “willful or continuing disregard” for their bank’s health. Mr Biden wants Congress to pass laws that would let the regulator also impose penalties for “negligent” executives — a lower legal threshold.
Yesterday, SVB’S parent company filed for bankruptcy protection.