Peace Garden News

WASHINGTON – U.S. Senator Kevin Cramer (R-ND) joined Senator Elizabeth Warren (D-MA) in introducing the Failed Bank Executives Clawback Act, bipartisan legislation requiring federal regulators to claw back up to three years of compensation given to bank executives, board members, controlling shareholders, and other key decision-makers in the event of a failure or resolution. This gives bank regulators the tools needed to hold the failed bank executives accountable for the costs those failures had on the rest of the banking system and the economy.

“Gross mismanagement by bank executives caused three of the largest bank failures in U.S. history,” said Senator Cramer. “When this type of blatant negligence occurs, executives of those failed banks should be held accountable for creating instability across the banking sector and leaving taxpayers to foot the bill. This legislation is a good step toward ensuring bank executives engaged in brazen mismanagement are held responsible.”

“Nearly three months after the collapse of Silicon Valley Bank, a bipartisan group of Senators is demonstrating a serious commitment to pass legislation requiring financial regulators to claw back pay from executives when they implode their bank,” said Senator Warren. “Congress must answer the President’s call for stronger laws to hold failed bank executives accountable, and I’m determined to work with lawmakers on both sides of the aisle in the Senate Banking, Housing, and Urban Affairs Committee to deliver change.”

Specifically, the Failed Bank Executives Clawback Act:

1. Requires large bank executives to return all or part of their compensation they received to the FDIC over the three-year period prior to their bank’s failure or FDIC resolution.

1. Applies to executives with at least $10 billion in assets who caused a minimal financial loss or significant adverse effect on the bank.
2. Places funds clawed back from executives into the FDIC’s Deposit Insurance Fund.
3. Extends claw back authorities established in the Dodd-Frank Wall Street Reform and Consumer Protection Act to apply to any bank entered into FDIC receivership, not solely those resolved under the FDIC’s Orderly Liquidation Authority.

Joining Senators Cramer and Warren are Senators J.D. Vance (R-OH), Bob Menendez (D-NJ), Mark Warner (D-VA), Chris Van Hollen (D-MD), Tina Smith (D-MN), Raphael Warnock (D-GA), John Fetterman (D-PA), and Katie Britt (R-AL), Catherine Cortez Masto (D-NV), Josh Hawley (R-MO), and Mike Braun (R-IN).

Click here for bill text.

Original source can be found here.