Banking crisis in the United States: Joe Biden asks Congress for a law to punish executives who fail banks

President Joe Biden asked Congress this Friday to pass a law that would make it easier for the US government punishment of managers which collapse the banks they manage, a week after the collapse of two entities that shook the financial stability of the United States.

In a statement released by the White House, the president asks that the government be authorized, for example, to revoke bonuses and capital gains collected by executives whose actions cause bank failures.

Biden’s request comes a week after the collapse of the Silicon Valley Bank, based in California, and Signature Bank of New York, two banks focused on the technology and cryptocurrency niche, whose leaders have been unable to cope with the high-rate scenario of the last year, which has led their customers to withdraw in mass their deposits and so they will collapse. Also occurs after this Thursday, eleven US banks came to the rescue of the First Republic to avoid its bankruptcy.

The Biden government has taken steps to guarantee deposits, but the president has ensured it it wouldn’t help the executives.

Biden is also asking Congress to do it get in the way those bank executives get other jobs in the sector after the bankruptcy of the institutions they manage. In another move to discourage risky stocks that endanger a bank’s health, the president wants Congress to expand the insurance company’s ability to excellent managers.

“The law limits authority management to hold executives accountable,” Biden said. “When banks fail due to mismanagement and excessive risk-taking, it should be easier for regulators to recover compensation from executives, impose civil penalties, and ban executives from returning to work in the banking sector.

“Congress must act to impose tougher penalties on top banking executives whose mismanagement has contributed to the failure of their institutions,” the president added.

Biden’s announcement follows a promise he made Monday outlining steps the government would take to make sure those who deposited money with Silicon Valley Bank and Signature Bank get back on their feet. He said he wanted executives responsible for putting banks at risk, shaking the national financial system and causing bank stocks to collapse.

“No one is above the law, and strengthening accountability is a major deterrent to future mismanagement,” Biden said.

Currently, the Federal Insurance Corporation can only recover claims from executives of the nation’s largest banks, but other executive penalties they require that “recklessness” or “involuntary or continued indifference” be shown. for the health of your bank. Biden wants Congress to allow the regulator to impose penalties on “negligent” executives, a legal threshold inferior.

ap​