Responding to the recent collapse of two banks in the US, Joe Biden, the President of the US, urged Congress to pass a law to make it easier to punish bank executives who are responsible for bank failures. The new legislation would also allow the government to collect back the stock sales gains earned by the executives and prevent granting bonuses to those executives.
FDIC to get more powers to punish failed bank executives
In today’s latest BNN News, Biden also urged Congress to make a law preventing the executives of failed banks from getting jobs in other institutions. It is mandatory for executives who caused the bank failure. He also requested that Congress give authority to the FDIC to impose a fine on executives responsible for the bank’s failure. It is to deter the risky actions taken by the executives that jeopardize the health of banks.
Proposals to strengthen the banking system
All these steps, put forward by Biden, will help deal with the misconduct of bank executives. He has outlined more systemic changes to strengthen the whole banking system. According to a communiqué from the White House on Friday, the policy advisers of Mr. Biden are still making plans to strengthen the regulations governing the banks, which are expected to be made available soon.
The existing law limits the authority of the administration to make the responsible executives accountable, according to Mr. Biden, who spoke after the government took control of Silicon Valley Bank, which failed last week. He went on to say that when banks failed because of mismanagement and excessive measures for risk-taking, the law should permit regulators to recover the compensation taken by the executives. It should also make it easier to impose civil penalties on those executives and keep them from taking jobs at other banks.
Government to refund deposits from failed banks
Biden further said that Congress must act to impose huge penalties on senior bank executives who contributed to the failure of the bank. After a pledge made on Monday, Biden said the government would take all the steps necessary to refund the entire deposits of account holders at Signature Bank and Silicon Valley Bank. He wants to ensure the accountability of those executives who are risking the future of banks and rattling the financial system of the nation.
Strengthening the accountability of executives is an important step in preventing mismanagement and the resulting bank failures in the future. The immediate question is whether Biden can persuade Congress to implement strict measures to prevent bank failures in the future and maintain the health of the financial system.
Holds a slim majority in the senate
After losing control of the house in mid-term elections held in 2022, Biden holds a thin majority in the Senate. In the most recent USA news, Kevin McCarthy, the House Speaker, has not indicated his stance on whether he will support the Biden proposal of recovering the bonuses from the executives of the failed Silicon Valley Bank. He needed time to go through what led to the collapse of the banks. He also wanted Financial Services to gather the required information for the next action.
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