President Joe Biden today in the Oval Office. EVELYN HOCKSTEIN / REUTERS
After the bankruptcy of Silicon Valley Bank, the American bank First Republic is in turn in very bad shape.
Joe Biden believes that “Congress must act to more heavily sanction bank executives whose mismanagement has contributed to the bankruptcy of their establishments”, according to a press release published on Friday. While the American banking world is rocked by several failures, the president argues that “no one is above the law” and that “toughening up liability has an important deterrent effect in preventing future cases of mismanagement”.
Noting that the law today limits the ability of administrative authorities to act, he considers that it should be “easier for regulators” to financially sanction bankers. Joe Biden therefore asks American parliamentarians to give more power to the regulatory authorities, and in particular to the Deposit Guarantee Agency (FDIC), the body which intervenes in the event of bank failure.
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Conservatives historically hostile to these measures
In particular, the American president would like this organization to be able to “claim” remuneration paid to offending bankers, impose fines on them, and prohibit them from exercising in the future in the sector. It remains to be seen how his call will be received: the Democratic party, that of Joe Biden, controls the Senate, but the other chamber of Congress, that of the representatives, is dominated by the Republican opposition.
However, conservatives are generally hostile to any tightening of banking regulation. Joe Biden’s appeal to Congress comes after the American banking world was rocked by the bankruptcy of Silicon Valley Bank, an establishment linked to the world of tech, and by the debacle of Signature Bank, a New York establishment.
Thursday, a group of major US banks had to come to the aid of another institution, First Republic, considered the new weak link in the system. This rescue did not reassure the markets for long, which were still very feverish on Friday.