Failed Bank Executives Accountability and Consequences Act
Sponsored By: Representative Waters, Maxine [D-CA-43]
Introduced
Summary
Executive accountability is the focus. This bill would make bank executives and directors liable for negligence or fraud that causes financial losses and would add clawbacks, bans, and tiered fines while pushing regulators to finalize strong clawback rules under section 956.
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- Executives and directors would face clawbacks of compensation when the FDIC acts as conservator or receiver and when the FDIC is receiver in orderly liquidation. The clawback would reach back two years before conservatorship or receivership and would have no time limit for fraud. Compensation covers salary, bonuses, incentives, benefits, severance, deferred pay, golden parachutes, and profits from selling the institution’s securities.
- Federal regulators and receivers would get new tools. The bill directs the Fed, the Office of the Comptroller of the Currency, the FDIC, the National Credit Union Administration, the Securities and Exchange Commission, and the Federal Housing Finance Agency to finalize joint guidance under section 956 with robust clawback requirements and lets banking agencies issue written notices to bar negligent parties from future participation in insured institutions.
- The bill creates two tiers of civil penalties for conduct contributing to failure. Negligent conduct can carry fines up to $25,000 per day. Knowing or reckless conduct can face a higher per-day penalty up to the applicable statutory maximum.
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 1 benefits, 1 costs, 0 mixed.
New penalties and clawbacks for executives
This bill would let regulators fine and remove bank executives and directors after a failure. It would allow civil fines of up to $25,000 per day for negligent conduct, and higher daily fines for knowing or reckless conduct as set elsewhere. The FDIC would be able to recover compensation paid to executives or directors for the two years before it became conservator or receiver, and there would be no time limit for recoveries when fraud is involved. Federal banking agencies could also serve written notice to bar a person who negligently caused a failed insured depository institution from taking part in any bank's affairs.
Regulators keep enforcement powers
This bill would say its changes do not limit existing enforcement authorities. It would preserve regulators' and law enforcement's prior powers to investigate and hold bank executives and board members accountable. The section is a rule of construction, not a new enforcement program.
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.
View on Congress.gov