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Biden Calls For Crackdown On Senior Bank Executives

   DailyWire.com
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The White House asked lawmakers on Friday to increase penalties for senior bank executives who preside over the collapse of their firms.

Silicon Valley Bank, one of the largest financial institutions in the United States, collapsed last week as depositors rushed to withdraw their funds after the company suffered heavy losses from the liquidation of a long-term bond portfolio. The Federal Deposit Insurance Corporation now directs holdings maintained by Silicon Valley Bank, which California state regulators closed on March 10, as well as Signature Bank in New York, which was closed on Sunday.

The Biden administration asserted that members of Congress should increase federal authority to “hold senior management accountable when their banks fail” or enter into the control of the FDIC. White House officials said that the government-backed corporation should have additional powers to seize executive compensation and benefits, noting that former Silicon Valley Bank CEO Greg Becker sold more than $3 million in shares days before the bank collapsed.

“The FDIC only has clawback authority under the Dodd-Frank Act’s special resolution authority, which applies to the very largest financial institutions,” a statement from the White House said. “That authority should be extended to cover a broader set of large banks, including banks the size of Silicon Valley Bank and Signature Bank.”

Current law allows the FDIC to prohibit bank executives from receiving new positions at other banks if they engage in “willful or continuing disregard for the safety and soundness” of their institution. Senior administration officials called on lawmakers to “strengthen this tool by lowering the legal standard for imposing this prohibition,” as well as expand authorization for the FDIC to collect fines from executives “when their actions contribute to the failure of their firms.”

President Joe Biden vowed after the collapse of Silicon Valley Bank and Signature Bank that “the American people and American businesses can have confidence that their bank deposits will be there when they need them.” Treasury Secretary Janet Yellen nevertheless said on Thursday that financial authorities would only protect uninsured deposits at banks whose failure would “create systemic risk and significant financial and economic consequences.” Sen. James Lankford (R-OK) had pressed Yellen about whether uninsured deposits at community banks in his state “regardless of their size” would be “fully insured.”

The current threshold of $250,000 is suitable for most individuals, yet businesses such as those served by Silicon Valley Bank often retain larger sums to conduct operations and pay employees. Lawmakers such as Rep. Maxine Waters (D-CA) and Sen. Elizabeth Warren (D-MA) have suggested that Congress should reconsider the $250,000 threshold.

Warren also introduced legislation that would repeal portions of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was signed by former President Donald Trump to lessen oversight for banks between $50 billion and $250 billion in assets.

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“The FDIC was forced to rush in to take over two failing banks, Silicon Valley Bank and Signature Bank, and then take extraordinary actions to protect those banks’ customers and prevent the contagion from spreading throughout the economy,” she commented. “If Congress and the Federal Reserve had not rolled back key provisions of Dodd-Frank, these banks would have been subject to stronger liquidity and capital requirements to help withstand financial shocks.”

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