After SVB's collapse, Biden calls on Congress to hold bank executives accountable for failures: 'No one is above the law'

• After the collapse of Silicon Valley Bank, President Joe Biden wants harsher penalties for executives at failed banks.
• He's calling on Congress to enact legislation that would claw back execs' compensation and keep them from new bank jobs.

President Joe Biden doesn't want to let bank executives off the hook for failures following the Silicon Valley Bank debacle.

On Friday, Biden released a statement calling on Congress to "impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions failing." The banking industry has fallen under intense scrutiny over the past week after federal regulators shut down Silicon Valley Bank (SVB) and crypto-friendly Signature Bank. Lawmakers — and now the president — want bank executives to be held accountable for actions that jeopardize taxpayer dollars.

"No one is above the law — and strengthening accountability is an important deterrent to prevent mismanagement in the future," Biden said in his statement.

"The law limits the administration's authority to hold executives responsible," he continued. "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."

Specifically, according to a White House fact sheet, Biden is calling on Congress to:

• Expand the Federal Deposit Insurance Corporation (FDIC)'s authority to "claw back" compensation from executives at failed banks
• Strengthen the FDIC's authority to prohibit executives from holding jobs at other banks if their own bank fails
• And expand the FDIC's authority to fine executives "when their actions contribute to the failure of their firms."

The president's call for stricter penalties comes as politicians grapple with what, if any, steps to take after SVB's abrupt closure and bailout. Progressive lawmakers like Sens. Elizabeth Warren and Bernie Sanders have called to roll back 2018 legislation that loosened regulations. Previously, under the Dodd-Frank Act, banks holding $50 billion or more in assets would be subject to stress tests that would identify if they had any weaknesses in their investment holdings. But the 2018 tweak raised that regulatory threshold to $250 billion; SVB had $212 billion.

That legislation ultimately made it through with 13 votes from Democrats; one of them, centrist Joe Manchin of West Virginia, told Insider that the Federal Reserve could and should have done more in the case of SVB and Signature.

"When the industries that propped up these banks were publicly flailing, alarm bells should have rung at the Fed and additional oversight should have been performed," Manchin said. "No law prevented the Fed from acting."

Warren, along with Sen. Richard Blumenthal, have also stressed the importance of holding bank executives accountable for failures. On Wednesday, they wrote a letter to Attorney General Merrick Garland and SEC Chairman Gary Gensler asking the agencies to investigate SVB's collapse, and that "SVB officials showed a pattern of risky and questionable decision making" that may have contributed to the bank's collapse.