Following the failures of Silicon Valley Bank and Signature Bank earlier this month, the Biden administration today called on Congress to expand the FDIC’s authority to claw back compensation from executives at failed banks, bar bank executives at failed banks from holding jobs in the banking industry and bring fines against executives of failed banks.
The administration is seeking authority for the FDIC that would go beyond the clawback authority extended under the Dodd-Frank Act’s Section 956. (Implementing regulations for Section 956 were proposed by the banking agencies, but never finalized.) It also called for lawmakers to lower the legal standard for barring a bank executive from holding another position in the banking industry when a bank is put into receivership. Currently, the FDIC can bar executives who engage in “willful or continuing disregard for the safety and soundness” of their institutions.
House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) echoed the administration’s call in a letter to the agencies, in which she urged them to investigate and bring enforcement actions against executives of the failed banks. Waters also called for the completion of the Section 956 rulemaking. Waters also noted that she is “moving quickly to develop legislation on clawbacks and other matters” in the wake of the two bank failures.