Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
ThinkAdvisor
The US Capitol in Washington, DC. (Photo: Bloomberg)

Regulation and Compliance > Legislation

Bill to Claw Back Bank Execs’ Bonuses Gets Senate Panel’s Approval

X
Your article was successfully shared with the contacts you provided.

A bipartisan bill to claw back some of bank executives’ compensation if their firms collapse advanced out of a Senate committee on Wednesday.

The legislation would allow the Federal Deposit Insurance Corp. to recoup bonuses that senior executives received before a bank failure. It would also increase certain penalties for them.

The congressional effort follows a public outcry sparked by executives at Silicon Valley Bank, Signature Bank and First Republic Bank receiving generous bonuses even as their lenders cratered. SVB and Signature collapsed in March after fast and furious deposit withdrawals. First Republic went under in May.

“Bank executives who take on too much risk and crash their banks shouldn’t get to land on their feet, they shouldn’t get to keep the profits they made by making bad bets with other people’s money, and they shouldn’t get to take their bad behavior to another bank,” Sherrod Brown, an Ohio Democrat who chairs the Senate Banking Committee, said in prepared remarks.

The bill, introduced by Brown and Tim Scott, the panel’s senior Republican, still needs the approval of the full Senate and House of Representatives.

Also Wednesday, Representative Maxine Waters, the top Democrat on the House Financial Services Committee, announced a wave of bills, including proposals to enhance the ability to claw back compensation of executives at failed banks, expand stress tests, and restrict stock sales by executives if their banks aren’t resolving regulators’ concerns in a timely fashion.

Critics have said former executives at troubled banks neglected to manage mounting risks, including quickly rising interest rates.

FDIC Chairman Martin Gruenberg has vowed to move on long-delayed rules to clamp down on the industry’s pay packages.

Photo: Bloomberg 

Copyright 2023 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.