WASHINGTON–Can any issue bring members of Congress together in a bipartisan way? At least one can, and its legislation to claw back the pay of executives at failed banks.
The Senate Banking Committee on Wednesday considered a proposal from its leaders, Sens. Sherrod Brown (D-OH) and Tim Scott (R-SC), that would allow regulators to claw back bank executives’ compensation from the two years before a failure and impose stiff fines on them.
“The effort to penalize top bankers comes as financial policymakers consider a wider array of rules changes to prevent a repeat of the banking crisis thatultimately claimed not only Silicon Valley Bank, but alsotwo other regional lenders, Signature Bank and First Republic,” the Washington Post reported.
As CUToday.info also reported earlier, following the failures of Silicon Valley Bank and Signature Bank in March, President Biden urged Congress to empower the FDIC to punish bank executives that failed to manage risks at their institutions.
Gaining Traction
“The notion ofseizing windfalls from stock sales gained traction after it emerged that Silicon Valley Bank CEO Greg Becker sold $3.6 million in his company’s stock just before its failure,” the Post reported.
According to the report, the bill from Brown and Scott would authorize the FDIC to recoup proceeds from such stock sales as well as bonuses that executives receive in the 24 months leading up to a failure. Executives who “recklessly” violate the law or engage in “unsafe and unsound practices” could also face penalties up to $3 million.
The Post noted that an earlier proposal led by another bipartisan duo on the Senate Banking Committee, Sens.Elizabeth Warren (D-MA) and J.D. Vance (R-OH), called for tougher penalties. Their measure would call for recouping pay dating back three years.
‘Bipartisan Momentum’
“There is now bipartisan momentum to pass legislation to hold executives more accountable when Wall Street takes outsized risks that pay off for executives but not the rest of us,” Natalia Renta, senior policy counsel at Americans for Financial Reform, told the Washington Post in an email. “It is a welcome change that some Republicans are finally joining forces with Democrats to advance an important aspect of financial reform.”
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