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Joe Biden urges Congress to toughen sanctions against executives after bank collapses: “No one is above the law”

US President Joe Biden has called on Congress to tighten sanctions and controls against bank executives following the recent collapses of Silicon Valley Bank (SVB) and Signature Bank. In that sense, he declared that “no one is above the law.”

“When banks fail due to mismanagement and excessive risk-taking, it should be easier for regulators to recover executive pay, impose civil penalties and ban them from ever working in the banking industry again,” he said.

Congress “must act to impose harsher penalties on senior bank executives whose mismanagement has contributed to the bankruptcy of their institutions,” added the US head of state.

The president’s statements come after a week of banking uncertainty in the country due to the fall and subsequent intervention of the SVB and Signature Bank by the authorities and the rescue of the First Republic Bank by the main banking corporations, with a injection of US$ 30,000 million.

Biden recalled that the Federal Deposit Insurance Corporation (FDIC), the Department of Justice and the Securities and Exchange Commission (SEC) have regulatory power to investigate the circumstances that led the SVB and Signature to enter bankruptcy, and to take action against your address as appropriate.

But he stressed that Congress “can and should do more” to hold top executives of such corporations to account. Biden also called for expanding the FDIC’s authority to recover pay, including proceeds from stock sales, from the heads of failing banks such as SVB and Signature Bank.

He also called for strengthening the FDIC’s power to bar executives from holding jobs in the banking sector when their banks go into receivership. “If you are responsible for the failure of one bank, you should not be able to turn around and run another,” the White House statement said.

The Democratic president also expressed his intention to expand the authority of that Federal Corporation to impose fines on bankrupt bank executives when their actions have led to that situation.

It should be remembered that Silicon Valley Bank Financial Group, the parent company of the ill-fated SVB, filed for bankruptcy in a New York court to attempt a capital restructuring, under judicial supervision, of the businesses that have been intervened by the authorities.

The SVB, which specializes in emerging technology companies, suffered a massive run on deposits after being forced to sell assets to cover liquidity needs. After its debacle, the authorities also intervened the regional bank Signature, dragged into the investor panic.

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Source: Elmostrador





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