Biden Administration Calls for Strengthening Regulations on Mid-Sized Banks

The Biden administration is calling on Congress to strengthen regulations on mid-sized banks, following the collapse of Silicon Valley Bank (SVB) and Signature Bank.[0] The president believes tougher penalties should be imposed on senior bank executives whose mismanagement contributed to the failure of their institutions.[1] He also believes that if an executive is responsible for the failure of one bank, they should not be able to lead another.

In a statement on Friday, Biden said, “No one is above the law – and strengthening accountability is an important deterrent to prevent mismanagement in the future. The law limits the administration’s authority to hold executives responsible. When 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.”[2]

The Federal Deposit Insurance Corporation (FDIC) and Federal Reserve have fully covered deposits at both failed banks, and rely on Wall Street and large financial institutions—not taxpayers—to foot the bill.[3]

The current law limits the Federal government’s ability to hold banking leaders accountable and the FDIC can only ban an executive from working in finance if they have engaged in “willful or continuing disregard for the safety and soundness” of their previous bank.[2] Biden is calling on Congress to lower the legal standard for imposing a ban when a bank is put into FDIC receivership.[4] The White House also wants Congress to make it easier for the FDIC to levy fines against negligent executives of failed banks when their actions contribute to the failure of their firms.

The president is also asking Congress to broaden the FDIC’s ability to claw back compensation from mid-sized banks. Currently, the FDIC has this power only for the major Wall Street banks, and reports suggest that Silicon Valley Bank CEO Greg Becker sold more than $3 million of shares in his bank just before he disclosed the losses that precipitated its failure.[1]

Sixteen Democratic senators and 33 House Democrats voted in 2018 to loosen regulations on midsize banks, but none of those still in office have expressed regret for their 2018 decision.[5] The Biden administration is now pushing for enhanced scrutiny for financial institutions, but moderate Senate Democrats are standing by their votes.

The president has repeatedly said that no losses will be borne by the taxpayers, and that the money will come from the fees that banks pay into the Deposit Insurance Fund.[6]

0. “Amid crisis, Biden tells Americans ‘banking system is safe'” ABC News, 13 Mar. 2023,

1. “Biden Wants to Expand a Federal Agency's Power to Go After Failed Bank Execs”, 17 Mar. 2023,

2. “Biden to Congress: Ban execs of failed banks from the industry” Axios, 18 Mar. 2023,

3. “Biden calls on Congress to tighten laws to claw back executive pay, levy penalties in bank failures” CNBC, 17 Mar. 2023,

4. “Here's why Biden's bank plan is not a bailout” CNN, 14 Mar. 2023,

5. “After Silicon Valley Bank failure, moderate Senate Democrats join GOP in resisting new bank rules” NBC News, 16 Mar. 2023,

6. “Biden stresses that Silicon Valley Bank is not getting a bailout” The Hill, 13 Mar. 2023,

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