On Friday, President Biden called on Congress to legislate and give the government more tools to punish those responsible for bank collapses.
"The law limits the administration's authority to hold executives accountable," Biden stated in an official statement from the White House. Biden wants lawmakers to give him permission to bar executives who have performed poorly from future work in the banking industry.
"When banks fail due to mismanagement and excessive risk-taking, it should be easier for regulators to recover compensation from executives, impose civil penalties and bar them from ever working in banking again," he added.
The President's remarks come in the wake of the failure and rescue of Signature Bank and SVB. After announcing his Administration's actions, Biden assured that those responsible for the failure of both banks would be prosecuted.
Chairman Gruenberg, @USTreasury @SecYellen, @FederalReserve Chair Powell & @USOCC Acting Comptroller Hsu released a statement on actions by the largest U.S. banks to deposit $30B into First Republic Bank & demonstrate the resilience of the banking system. https://t.co/C1LkC4UPhP pic.twitter.com/DNHIZYMH6H
— FDIC (@FDICgov) March 16, 2023
The government claims that the banking system is now safer and more stable thanks to the Biden Administration’s intervention, but the failures of the three American banks could have very negative effects on the world economy. Experts are comparing this situation to the economic crisis of 2008. Stock markets around the world collapsed after the collapse of American banks.
Just this Friday, the country’s largest banks saved First Republic Bank from filing for bankruptcy by depositing $30 billion. The country's major banks mobilized to provide the entity with the necessary liquidity to help it avoid going bankrupt and having to be rescued by the government.
