The investigations into recent bank failures are just beginning.
President Joe Biden released a statement Friday (March 17) calling on Congress to impose tougher penalties on senior bank executives whose mismanagement contributed to their institutions failing, saying this would strengthen accountability and deter mismanagement in the future.
“The law limits the administration’s authority to hold executives responsible,” Biden said. “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.”
On the same day, the chairman and the ranking member of the House Financial Services Committee (HFSC) announced that a bipartisan hearing on the failures of Silicon Valley Bank and Signature Bank would be held on March 29.
HFSC Chairman Patrick McHenry and HFSC Ranking Member Maxine Waters announced the hearing in a Friday press release and said that the witnesses would include Martin J. Gruenberg, the chairman of the board of directors of the Federal Deposit Insurance Corporation (FDIC), and Michael S. Barr, the vice chair for supervision for the board of governors of the Federal Reserve.
“This hearing will allow us to begin to understand why and how these banks failed,” McHenry and Waters said in the release. “As Chairman and Ranking Member, we take our oversight duties seriously. We are working around the clock to deliver answers to the American people in order to protect depositors, promote the safety and soundness of America’s banks, and strengthen our financial system.”
Federal regulators will investigate the failures of the banks too.
In a fact sheet released along with Biden’s statement, the White House said the FDIC, the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have the regulatory authority to investigate the bank failures and take appropriate action against bank executives.
McHenry said a day earlier, on Thursday (March 16), that the HFSC is in contact with regulators and is monitoring the ongoing situation.
“We will ensure any bad actors are held accountable, while providing transparency for the American people,” McHenry said at the time.
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