President Biden Calls on Congress to Increase Bank Executive Penalties

President Joe Biden is calling on Congress to pass legislation that would increase the penalties on bank executives whose mismanagement contributes to the failure of their institutions. Biden emphasized the importance of reinforcing accountability as a means of avoiding potential mismanagement in the future, noting that “No one is above the law – and strengthening accountability is an important deterrent to prevent mismanagement in the future,” in a statement released on Friday.[0]

The president's call to action comes in response to the recent collapse of two banks, Silicon Valley Bank (SVB) and Signature Bank. Last weekend, regulators moved to guarantee deposits in the two banks, using fees paid by other banks as a backstop.[1]

Under the current law, the administration’s authority to hold executives responsible is limited.[2] Biden is looking to make it easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again. He also wants to expand the FDIC’s ability to fine executives and Congress to pass legislation to make it tougher for banking executives to land other jobs in the industry after the failure of institutions they lead.[2]

U.S. Treasury Secretary Janet Yellen on Thursday said the nation's banking system is sound and the FDIC insures up to $250,000 per depositor, per ownership category.[3] Any money beyond the $250,000 limit is considered uninsured, meaning individuals may not get all their money if a bank shuts down.[4]

Meanwhile, 11 of the largest U.S. banks—including JPMorgan Chase, Bank of America Citigroup and Wells Fargo—have provided First Republic Bank with a $30 billion rescue package.[3]

As the government seeks to reassure the public that the banking system is safe, Biden said, “Your deposits will be there when you need them.”[5] The president also noted that Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing.

Moderate Senate Democrats who voted to loosen regulations on midsize banks in 2018 are standing by their votes, joining Republicans in resisting enhanced scrutiny for financial institutions.[6] However, some Senate Democrats are seeking to reimplement the law in the wake of Silicon Valley Bank and Signature Bank’s abrupt implosions.

Biden's efforts to hold bank executives accountable and protect depositors are seen as vital for the nation's financial system. “The fact that he is doing this at 9 a.m.

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

1. “Biden wants Congress to boost penalties for executives when mid-sized banks fail” NPR, 17 Mar. 2023,

2. “Biden urges Congress to make it easier to punish bank executives after collapse” NBC News, 17 Mar. 2023,

3. “Biden Official Helps Restore Confidence as Bank Stocks Rise” Newsweek, 16 Mar. 2023,

4. “Bank failures: A list of failed banks” Business Insider, 15 Mar. 2023,

5. “Longtime banker with roots at branches in Greater Cincinnati confident in local banking system” WLWT Cincinnati, 13 Mar. 2023,

6. “Senate Democrats Who Voted For 2018 Bank Deregulations Say They Have No Regrets” Forbes, 15 Mar. 2023,

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