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Mar 20, 2023
Biden Places the Burden of Additional Bank Measures on Split Congress
(Bloomberg) -- The White House has a message for those watching for a sweeping US response to the global banking crisis: It’s now in the hands of Congress.
Since President Joe Biden spoke last Monday to reassure nervous depositors that their money was safe in financial institutions and tout a series of regulatory moves to shore up troubled banks, he has said little about the turmoil that has shaken markets.
White House officials in the meantime have amplified his calls for stronger rules to prevent future crises, including measures that would allow the Federal Deposit Insurance Corp. to further punish executives of failed banks and tighten regulations for larger banks.
Yet the White House said Monday that lawmakers must approve those changes, lowering expectations for the president to enact them using his executive power even though tougher banking regulations have a slim chance of getting through a divided Congress.
“We should not let Congress off the hook,” said White House Press Secretary Karine Jean-Pierre. “More actions need to be taken for sure. The president has taken action to deal with the moment that we’re in.”
House and Senate leaders have showed little appetite for taking up such measures, turning the issue into a political hot potato — at least for now.
The White House has a tightrope to navigate in responding to chaos in the banking industry. By publicly projecting calm, Biden’s advisers are seeking to avoid creating further panic that could worsen the situation. At the same time, however, they have to show they are addressing the situation in a substantiative way in order to maintain confidence in the financial system.
It’s unclear how long the White House will be able to maintain that stance in the face of congressional inaction. Speaker Kevin McCarthy has downplayed the need for new legislation cracking down on banks, telling reporters Sunday that he doesn’t believe the situation is a “regulation problem.” Senate Majority Leader Chuck Schumer has called for “strong legislation” that is bipartisan but has been vague about what the upper chamber might take up.
Jean-Pierre repeatedly ducked questions at Monday’s news briefing about what more the administration might do on its own to address the situation, even after the historic sale of Switzerland’s Credit Suisse Group AG and uncertainty surrounding the future of Silicon Valley Bank. Instead, she pointed to actions regulators have already taken.
She declined to detail what other specific measures might be taken, like additional assistance for the struggling First Republic Bank or higher limits for FDIC insurance on bank deposits.
The Biden administration is going to look into what regulations or laws should be strengthened to avoid a repeat, she said.
“Of course, there are things that we can do without Congress, which is what we’re seeing the regulators do,” Jean-Pierre said.
The press secretary said Biden still has confidence in Federal Reserve Chairman Jerome Powell, who has come under fire from Senator Elizabeth Warren, a Massachusetts Democrat, as well as some Republicans for the Fed’s supervision of banks.
Still, there has been a flurry of activity behind the scenes in the administration that belies the relative public silence.
A coterie of senior figures, including Treasury Secretary Janet Yellen, White House chief of staff Jeff Zients and top Biden economic adviser Lael Brainard, have kept the president informed. Biden’s team has consulted with outside business titans including Berkshire Hathaway Inc.’s Warren Buffett and JPMorgan Chase & Co.’s Jamie Dimon and kept in touch with overseas counterparts.
Yet the White House has also not shifted into crisis mode in public. Biden maintained his regular schedule, spending the weekend at his Wilmington, Delaware, home and hosting a Norwuz celebration Monday at the White house.
Jean-Pierre addressed the banking situation Monday only after the stars of the television show “Ted Lasso” appeared in the briefing room as part of a White House event on mental health, and after National Security Council spokesman John Kirby had a lengthy back-and-forth with reporters on foreign affairs.
The only other time Biden has spoken to the press about the financial turmoil was Friday night, while departing the White House en route to Delaware. Asked by a reporter if he was confident the bank crisis had calmed down, Biden offered a clipped answer.
--With assistance from Jennifer Jacobs, Justin Sink and Steven T. Dennis.
©2023 Bloomberg L.P.
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