Days after U.S. Sen. Elizabeth Warren expressed outrage over the bonuses that Silicon Valley Bank executives were handing out hours before the bank failed, President Joe Biden on Friday called on Congress to strengthen regulatory powers to hold officials at failed banks accountable.
The president said in a statement that the White House's authority to hold SVB executives directly responsible for the failure is limited, but said Congress can and should pass legislation granting the Federal Deposit Insurance Corporation (FDIC) broader powers to take action against former SVB CEO Greg Becker and other executives.
He called on lawmakers to allow the FDIC to claw back compensation from executives, impose civil penalties, and bar executives from working in the financial services industry if their banks failed "due to mismanagement and excessive risk taking."
"I'm firmly committed to accountability for those responsible for this mess," said Biden. "No one is above the law—and strengthening accountability is an important deterrent to prevent mismanagement in the future. Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing."
SVB and Becker himself raked in significant profits by largely serving wealthy tech companies, and took a risk by holding an "abnormally large ratio of uninsured deposits," as Warren said earlier this week. They also invested a large share of the funds into long-term Treasury bonds whose value plummeted as interest rates rose, causing the bank's clients to withdraw their money only to find SVB did not have sufficient funds on hand.
In addition to giving out bonuses hours before SVB collapsed, Becker sold roughly $3 million worth of shares of the bank in the weeks before the failure.
Biden called for Congress to allow the regulatory agency to penalize executives for "negligent" conduct as well.
"We need to claw back every penny of their unjust pay and bonuses, impose real penalties, and ensure these executives never work in the banking industry again," said the Massachusetts Democrat. "Congress must step up."
This content originally appeared on Common Dreams and was authored by Julia Conley.