Estimated read time: 2-3 minutes
WASHINGTON — President Joe Biden on Friday called on Congress to give regulators greater power over the banking sector, including leveraging higher fines for managers, clawing back executives' compensation and barring officials from failed banks, according to a statement released by the White House.
"No one is above the law," Biden said in the statement, "and strengthening accountability is an important deterrent to prevent mismanagement in the future."
The current law "limits the administration's authority to hold executives responsible," he said.
Specifically, Biden is asking Congress to give the Federal Depository Insurance Corp greater authority to claw back compensation, "including gains from stock sales – from executives at failed banks like Silicon Valley Bank and Signature Bank," the White House said in a second statement.
Silicon Valley Bank CEO Greg Becker sold $3.6 million worth of shares in late February, about two weeks before the bank entered FDIC receivership, Bloomberg and CNBC reported.
"The president urges Congress to expand the FDIC's authorities to expressly cover cases like this," the White House statement said, citing Becker's stock sales.
The president is also asking Congress to give the FDIC more authority to ban bank executives from the industry when their banks go into receivership and to fine bank managers whose banks fail.
Currently, the FDIC is limited to clawing back executive pay only if one of the nation's largest institutions were to fail, and can only bar executives from the industry if they were found to be engaging in "willful and continuing disregard" in running a bank safely.
Separately, the 2010 Dodd-Frank financial reform law also directed regulators to draft new rules aimed at ensuring banker pay packages do not encourage them to take on unnecessary risk. But that multiagency effort has been stalled for years.
Democrats who have been calling for tougher banking regulation were quick to hail Biden's statement, but it is unclear whether it has bipartisan support in Congress.
"We need to claw back every penny of their unjust pay and bonuses, impose real penalties, and ensure these executives never work in the banking industry again," said Sen. Elizabeth Warren, a member of the Senate Committee on Banking, Housing, and Urban Affairs.