SBV collapse: Biden takes aim at failed bank executives’ pay, asks Congress to fine them

United States President Joe Biden on Friday took aim at Silicon Valley Bank executives’ pay and urged the Congress to give regulators greater power over the banking sector.

India Today World Desk

Washington,UPDATED: Mar 18, 2023 08:35 IST

File photo of United States President Joe Biden | Reuters

By India Today World Desk: United States President Joe Biden on Friday asked Congress to give regulators greater power over the banking sector, according to a statement released by the White House, reported Reuters. He asked Congress to leverage higher fines for managers, claw back executives’ compensation and bar officials from failed banks.

According to Bloomberg and CNBC, 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.

Citing Becker’s stock sales, the White House statement said in a statement that, “President urges Congress to expand the FDIC’s authorities to expressly cover cases like this”.

In the statement, Biden said, “No one is above the law and strengthening accountability is an important deterrent to prevent mismanagement in the future.”

He added that the present law limits the administration’s authority to hold executives responsible, Reuters reported.

In another statement by the White House, Biden is asking Congress to give the Federal Depository Insurance Corp (FDIC) greater authority to claw back compensation, “including gains from stock sales – from executives at failed banks like Silicon Valley Bank and Signature Bank”.

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.

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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.

Global banking and financial stocks took a massive hit on March 10 after US-based commercial lender SVB Financial Group was shuttered by US regulators, following an aggressive decline in its stock that led to a market loss of over $80 billion.

With this, Silicon Valley Bank became the largest US bank to fail since the 2008 financial crisis and its sudden collapse stranded billions of dollars belonging to companies, investors and depositors.

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