Sixteen Democratic Senators are calling on federal regulators to strengthen and finalize a proposed “clawback” rule in light of the Wells Fargo (WFC) fake-accounts scandal.
Section 956 of the Dodd-Frank financial reform act aims to prohibit executive-pay arrangements that promote excessive risk-taking or misconduct in the financial-services industry, wrote the Senators — including Elizabeth Warren, Robert Menendez and Al Franken — in a letter Wednesday.
The letter was sent to Federal Reserve Board Chair Janet Yellen and Securities and Exchange Commission Chair Mary Jo White, as well as to the heads of the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the National Credit Union Administration and the Federal Housing Finance Agency.
The Senators note that Wells Fargo’s board acted “belatedly in the face intense negative publicity, to claw back only a small fraction” of former Wells Fargo CEO John Stumpf’s compensation. “However, it seems clear that without unusual public pressure, high-level Wells Fargo executives would not have been held accountable at all and would have received their entire bonuses.”