WASHINGTON \u2014 President Biden asked Congress on Friday to pass legislation to give financial regulators broad new powers to claw back ill-gotten gains from the executives of failed banks and impose fines for failures.<\/p>\n
The proposal, a response to the federal rescue of Silicon Valley Bank and Signature Bank last week, would also seek to bar executives at failed banks from taking other jobs in the financial industry.<\/p>\n
The measures contained in Mr. Biden\u2019s plan would build on existing regulatory powers held by the Federal Deposit Insurance Corporation.<\/p>\n
\u201cStrengthening accountability is an important deterrent to prevent mismanagement in the future,\u201d Mr. Biden said in a statement released by the White House.<\/p>\n
\u201cWhen banks fail due to mismanagement and excessive risk taking, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again,\u201d he said, adding that Congress would have to pass legislation to make that possible.<\/p>\n
\u201cThe law limits the administration\u2019s authority to hold executives responsible,\u201d he said.<\/p>\n
One plank of the proposal would broaden the F.D.I.C.\u2019s ability to seek the return of compensation from executives of failed banks, in response to reports that the chief executive of Silicon Valley Bank sold $3 million in shares of the bank shortly before it was taken over by federal regulators a week ago. Regulators\u2019 current clawback powers are limited to the largest banks; Mr. Biden would expand them to cover banks the size of Signature and Silicon Valley Bank.<\/p>\n
The president is also asking Congress to lower a legal bar that the F.D.I.C. must clear in order to bar an executive from a failed bank from working elsewhere in the financial industry. That ability currently applies only to executives who engage in \u201cwillful or continuing disregard for the safety and soundness\u201d of their institutions. He is similarly seeking to broaden the agency\u2019s ability to impose fines on executives whose actions contribute to the failure of their banks.<\/p>\n
The proposals face an uncertain future in Congress. Republicans control the House and have opposed other pushes by Mr. Biden to strengthen federal regulations. A 2018 law to roll back some of the regulations on banking that were approved after the 2008 financial crisis passed the House and Senate with bipartisan support.<\/p>\n