Current:Home > ScamsSenate weighs bill to strip failed bank executives of pay -Capitatum
Senate weighs bill to strip failed bank executives of pay
View
Date:2025-04-17 23:30:00
A bill that would take back pay from executives whose banks fail appears likely to advance in the Senate, several months after Silicon Valley Bank's implosion rattled the tech industry and tanked financial institutions' stocks.
The Senate Banking Committee on Wednesday heard the bipartisan proposal, co-sponsored by Sens. Sherrod Brown (D-Ohio) and Tim Scott (R-S.C.)
Dubbed the Recovering Executive Compensation Obtained from Unaccountable Practices Act of 2023, or RECOUP Act, the bill would impose fines of up to $3 million on top bankers and bank directors after an institution collapses. It would also authorize the Federal Deposit Insurance Commission to revoke their compensation, including stock sale proceeds and bonuses, from up to two years before the bank crash.
- Bipartisan group of senators introduces bill to claw back compensation from executives following bank failures
- Executives from failed banks questioned on CEO pay, risk
- Biden asks Congress to crack down on executives at failed banks
"Shortly after the collapse of SVB, CEO Greg Becker fled to Hawaii while the American people were left holding the bag for billions," Scott said during the hearing, adding, "these bank executives were completely derelict in their duties."
The proposal is policymakers' latest push to stave off a potential banking crisis months after a series of large bank failures rattled the finance industry.
In March, Democratic Sens. Elizabeth Warren of Massachusetts and Catherine Cortez-Masto of Nevada teamed up with Republican Sens. Josh Hawley of Missouri and Mike Braun of Indiana to propose the Failed Bank Executive Clawback Act. The bill — a harsher version of the RECOUP Act —would require federal regulators to claw back all or part of the compensation received by bank executives in the five years leading up to a bank's failure.
Silicon Valley Bank fell in early March following a run on its deposits after the bank revealed major losses in its long-term bond holdings. The collapse triggered a domino effect, wiping out two regional banks — New York-based Signature Bank and California's First Republic.
A push to penalize executives gained steam after it emerged that SVB's CEO sold $3.6 million in the financial institution's stock one month before its collapse. The Justice Department and the Securities and Exchange Commission are investigating the timing of those sales, the Wall Street Journal reported.
Tight grip on compensation
Recouping bank officials' pay could prove difficult given that regulators have not changed the rules regarding clawbacks by the FDIC. Under the Dodd-Frank Act, the agency has clawback authority over the largest financial institutions only, in a limited number of special circumstances.
In a hearing before the Senate Banking Committee on Tuesday, FDIC Chair Martin Gruenberg signaled a need for legislation to claw back compensation.
"We do not have under the Federal Deposit Insurance Act explicit authority for clawback of compensation," Gruenberg said in response to a question by Cortez-Masto. "We can get to some of that with our other authorities. We have that specific authority under Title II of the Dodd-Frank Act. If you were looking for an additional authority, specific authority under the FDI Act for clawbacks, it would probably have some value there."
- In:
- United States Senate
- Silicon Valley Bank
- Signature Bank
- First Republic Bank
veryGood! (882)
Related
- How to watch new prequel series 'Dexter: Original Sin': Premiere date, cast, streaming
- A Republican operative is running for Congress in Georgia with Trump’s blessing. Will it be enough?
- Save Up to 81% Off Stylish Swimsuits & Cover-Ups at Nordstrom Rack: Billabong, Tommy Bahama & More
- LENCOIN Trading Center: The Best Buying Opportunity in a Bear Market
- Woman dies after Singapore family of 3 gets into accident in Taiwan
- Northern lights set the sky aglow amid powerful geomagnetic storm
- Cavaliers crash back to earth as Celtics grab 2-1 lead in NBA playoffs series
- A parliamentary election runoff puts hard-liners firmly in charge of Iran’s parliament
- Costco membership growth 'robust,' even amid fee increase: What to know about earnings release
- With extreme weather comes extreme insurance premiums for homeowners in disaster-prone states
Ranking
- Are Instagram, Facebook and WhatsApp down? Meta says most issues resolved after outages
- Rainn Wilson's personal experiences inspired his spirituality-focused podcast: I was on death's door
- Extremely rare blue lobster found off coast of English village: Absolutely stunning
- Are you using leave-in conditioner correctly? Here’s how to get nourished, smooth hair.
- Federal appeals court upholds $14.25 million fine against Exxon for pollution in Texas
- Michigan woman set to celebrate her first Mother's Day at home since emerging from 5-year coma
- Can you eat cicadas? Try these tasty recipes with Brood XIX, Brood XIII this summer
- North Macedonia’s new president reignites a spat with Greece at her inauguration ceremony
Recommendation
Meet the volunteers risking their lives to deliver Christmas gifts to children in Haiti
Swifties dress in 'Tortured Poets' themed outfits for Eras Tour kickoff in Paris
California has a multibillion-dollar budget deficit. Here’s what you need to know
Hawaii officials outline efforts to prevent another devastating wildfire ahead of a dry season
Juan Soto praise of Mets' future a tough sight for Yankees, but World Series goal remains
Couple charged in death of 11-year-old Arizona boy with 'numerous' medical conditions, police say
Famous Iranian director Mohammad Rasoulof sentenced to lashings and 8 years in prison ahead of Cannes film festival, lawyer says
What is Eurovision? Everything to know about the European song contest