President Biden Calls for Congressional Action as Bank Failures Mount
Despite major banks stepping in to save First Republic Bank from collapsing, a week of investors navigating a rocky road on Wall Street has ended with the markets down.
President Biden is now calling for lawmakers to step in, urging Congress to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions’ failure.
The Biden administration also wants regulators to be able to take back gains from executive stock sales, empower the FDIC to impose fines against executives of failed banks, and to ban them from holding jobs in the industry.
The Wall Street Journal has reported that executives at First Republic sold $12 million in stock in recent months, and those executives are still in charge.
First Republic has declined to comment on those stock sales.
The parent company of Silicon Valley Bank has now filed for bankruptcy, and sources tell ABC News that the FBI is looking into whether there is evidence of insider trading.
The bankruptcy helps the bank’s parent company find new owners for its other business lines that are not under federal control, which includes things like their investment bank and wealth management firm.
The turmoil in the banking industry is causing concern across the U.S.
and resulting in losses on Wall Street, with the Dow ending the week down 384 points or 1.2 percent.
Despite 11 of the country’s biggest banks swooping in to save First Republic Bank with a $30 billion rescue package, there is still a lot of angst in the marketplace.
Some investors fear that we may see a bank failure or two this weekend.