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119-hr-7886119th CongressWALLET

Failed Bank Executives Accountability and Consequences Act

Sponsored By: Representative Waters, Maxine [D-CA-43]

Introduced

Summary

Recoup pay and bar negligent bank executives. This bill would give regulators new authority to recover compensation, fine, suspend, or ban executives and directors whose negligence caused losses at failed banks.

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  • Executives and directors would face clawbacks of compensation paid during the two-year period before a conservatorship or receivership. The definition of recoverable pay covers salary, bonuses, incentives, severance, deferred pay, benefits, and profits from stock sales, and there is no time limit for recovery in cases of fraud.
  • Regulators would gain new removal and prohibition powers and could impose civil penalties. Negligent conduct can trigger fines up to $25,000 per day and larger penalties apply for knowing or reckless conduct.
  • Enforcement would apply beyond insured banks. The FDIC could recover similar compensation from executives of covered financial companies under Dodd-Frank, and the Federal Reserve, OCC, FDIC, NCUA, SEC, and FHFA would be directed to finalize Section 956 rules with robust clawback requirements.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 1 benefits, 2 costs, 0 mixed.

Fines and clawbacks for bank executives

If enacted, the bill would let regulators fine and take back pay from bank executives who helped cause a bank to fail. Negligent conduct could draw civil fines of up to $25,000 per day. Knowing or reckless conduct could trigger higher per-day fines under existing maximums. The FDIC would also be able to recover compensation paid in the two years before it became conservator or receiver. If there was fraud, the FDIC could recover pay from earlier years too, and the agency would write rules saying what counts as "compensation."

Regulators keep enforcement powers

If enacted, the bill would say it does not limit regulators' or law enforcement agencies' existing powers to hold bank executives and board members accountable. Existing civil and criminal enforcement tools would remain available. This protection would take effect upon enactment.

Ban on failed-bank insiders running banks

If enacted, a federal banking agency would be able to bar a person who negligently caused financial loss to a failed bank from participating in the affairs of any insured depository institution. The agency must make the negligence finding before serving written notice of the intended prohibition. This ban would apply after a bank failure and would start upon enactment.

Sponsors & CoSponsors

Sponsor

Waters, Maxine [D-CA-43]

CA • D

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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