The bipartisan legislation would require federal regulators to claw back up to three years of compensation received by big bank executives in the event of a failure or resolution
As a member of the U.S Senate Banking Committee, this is Senator Reverend Warnock’s latest effort to hold big banks and major corporations to account for reckless and greedy behavior
Senator Reverend Warnock: “When bankers make risky bets that threaten our entire economy, they should not get to cash in. They should be held accountable”
Washington, D.C. – Today, U.S. Senator Reverend Raphael Warnock (D-GA), a member of the U.S Senate Banking Committee, announced his introduction of the Failed Bank Executives Clawback Act – bipartisan legislation that would require federal regulators to claw back up to three years of compensation received by big bank executives, board members, controlling shareholders, and other key decision-makers in the event of a bank failure or resolution. In May, Senator Warnock pressed Gregory Becker, the former CEO of Silicon Valley Bank (SVB), on whether or not Mr. Becker was aware of the ramifications of SVB’s failures. Senator Warnock also pushed Mr. Becker if he thought it was right for him to receive his nearly $10 million bonus in the wake of SVB’s failure.
“When bankers make risky bets that threaten our entire economy, they should not get to cash in. They should be held accountable,” said Senator Reverend Raphael Warnock about this bipartisan legislation.
The Federal Deposit Insurance Corporation (FDIC) currently has limited ability to claw back executive compensation in the event of a bank failure. The bipartisan Failed Bank Executives Clawback Act would give federal bank regulators the tools they need to hold the executives of big failed banks responsible for the costs that those failures exact on the rest of the banking system and the economy. Specifically, the legislation would:
- Require the FDIC to claw back from large bank executives all or part of the compensation they received over the three-year period preceding their bank’s failure or FDIC resolution.
- Apply to directors, officers, controlling shareholders, and other high-level persons involved in decision-making of banks with $10 billion or more in assets who caused more than a minimal financial loss to, or had a significant adverse effect on, the bank.
- Direct funds clawed back from executives into the FDIC’s Deposit Insurance Fund.
- Extend claw back authorities established by Section 204(a)(3) of 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
As Chair of the Banking Subcommittee on Financial Institutions and Consumer Protection, Senator Warnock has been working to hold big banks and major corporations to account for reckless and greedy behavior. In October 2022, Senator Warnock’s work to curb predatory bank fees gained significant momentum following the Consumer Financial Protection Bureau’s (CFPB) announcement that the agency would take steps to protect Georgians from junk fees, including surprise overdraft fees. In February, he introduced the Big Oil Windfall Profits Tax Act to crack down on profiteering by Big Oil and return the industry’s excessive gains to working people.
In March, Senator Warnock urged regulators to set a temporary moratorium on overdraft and non-sufficient fund fees and urged the CEOs of the ten banks generating the most revenue from these fees to waive them for their customers in the wake of the failures of Silicon Valley Bank and Signature Bank this month, which led to disruptions across the financial sector. Later that month, Senator Warnock pressed Martin Gruenberg, Chair of the Federal Deposit Insurance Corporation (FDIC), to provide specific details to ensure former Silicon Valley Bank executives are held to account in the wake of the bank’s recent failure. Senator Warnock also pushed for better protections for ordinary Americans from overdraft and non-sufficient fund fees, which might have been incurred at no fault of their own because of SVB’s collapse.
See here for a one-pager on the legislation and here for full bill text.
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