News and Music Discovery
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

The Biden administration is calling for tougher penalties on bank executives


It's been a tumultuous week in politics and banking. President Biden is calling on Congress to make it easier to punish bank executives. This follows the recent collapse of Silicon Valley Bank and Signature Bank. The administration stepped in last weekend to backstop uninsured deposits at those two banks and prevent a broader run on deposits at other regional banks. Now it's looking at what else it can do. NPR White House correspondent Asma Khalid joins us now. Welcome to the program.

ASMA KHALID, BYLINE: Hey there. It's good to be with you.

RASCOE: The president ended his week by saying to Congress that there needs to be more power to punish bank executives in these situations. So what is he trying to do?

KHALID: Well, in a nutshell, Biden wants tougher penalties on bank executives. You know, under the current law, regulators can claw back compensation and stock gains from executives but only at the very largest banks. And, you know, keep in mind the two banks that failed recently, Silicon Valley Bank and Signature - those banks were mid-size, so they would not qualify under the current rules. Biden wants Congress to lower the bar so that executives are held accountable when their behavior leads to a bank failure. And he also wants Congress to make it easier to ban these kinds of executives from working in the banking industry again.

RASCOE: I mean, all of this is up to Congress, but we know Republicans control the House, and bipartisan deals are hard to come by. So, I mean, is this just kind of talking?

KHALID: Well, they are hard to come by. That is correct. But I will say I think it depends on what the bills look like. You know, targeting specific bank executives is very different than big regulatory reform. And certainly, we are hearing from some Democrats who are calling for more regulation of small and regional banks. The rules on these banks were, in fact, loosened in 2018 when Congress passed a bill to repeal a portion of the Dodd-Frank Act. And I'm sure you recall that's the law that was passed as a result of the big bank failures in 2008, 2009. And it is worth remembering that some Democrats in 2018 voted for this rollback.

I think, ultimately, what happens next really depends on who is to blame for what went wrong. Already we are hearing many Republicans argue that this looks like a supervision problem, not a regulation problem. And I've been speaking with some people inside the White House and outside who are familiar with the discussions. And it's clear that the administration is looking at what fixes it can make without Congress. Their main priority this week has been to calm the situation down, ensure, you know, that there aren't additional runs on other banks across the country. But the White House is expected to announce some more details on the regulatory front in the coming days. And it's likely that you'll see the administration drive hard on accountability and ensuring, you know, that regulators are stepping up their supervision that they're already allowed to do.

RASCOE: So what could the president do on the regulatory front?

KHALID: You know, my understanding is the specifics are still being worked out. Keep in mind, the bank intervention last weekend transpired really quickly. A White House official told me that, sometimes, you're presented with very limited windows to make decisions with imperfect information. And that was even more so in this case, where they had to make a decision over the course of less than half a weekend about what to do with Silicon Valley Bank and Signature. And, you know, now they have more time to assess what went wrong. And going back to your regulation question, one thing Biden could do is call on the Fed to be more aggressive in bank supervision and oversight. You know, so for example, the Fed does have some discretion with how it deals with banks that have between 100 billion and $250 billion in assets. The president could possibly call on the Fed to start treating those banks with $100 billion more like the very large banks. And that's noteworthy because that financial range would have, in fact, included an institution the size of Silicon Valley Bank. The question, of course, Ayesha, is whether Biden will, in fact, call on the Fed to make any changes.

RASCOE: NPR White House correspondent Asma Khalid, thank you so much for joining us.

KHALID: My pleasure. Transcript provided by NPR, Copyright NPR.

Ayesha Rascoe is a White House correspondent for NPR. She is currently covering her third presidential administration. Rascoe's White House coverage has included a number of high profile foreign trips, including President Trump's 2019 summit with North Korean leader Kim Jong Un in Hanoi, Vietnam, and President Obama's final NATO summit in Warsaw, Poland in 2016. As a part of the White House team, she's also a regular on the NPR Politics Podcast.
Asma Khalid is a White House correspondent for NPR. She also co-hosts The NPR Politics Podcast.