Current:Home > FinanceSenate weighs bill to strip failed bank executives of pay -Wealth Nexus Pro
Senate weighs bill to strip failed bank executives of pay
View
Date:2025-04-15 07:56:45
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! (9599)
Related
- New Mexico governor seeks funding to recycle fracking water, expand preschool, treat mental health
- E! News Names Keltie Knight New Co-Host
- Texas Panhandle wildfires have burned nearly 1.3 million acres in a week – and it's not over yet
- More people filed their taxes for free so far this year compared to last year, IRS says
- The Louvre will be renovated and the 'Mona Lisa' will have her own room
- Nashville woman missing for weeks found dead in creek as homicide detectives search for her car
- A New EDF-Harvard Satellite Will Monitor Methane Emissions From Oil and Gas Production Worldwide
- Nebraska’s Legislature and executive branches stake competing claims on state agency oversight
- Meet first time Grammy nominee Charley Crockett
- San Francisco votes on measures to compel drug treatment and give police surveillance cameras
Ranking
- 'Squid Game' without subtitles? Duolingo, Netflix encourage fans to learn Korean
- What time do Super Tuesday polls open and close? Key voting hours to know for 2024
- Beyoncé and Jay-Z made biggest real estate move in 2023 among musicians, study finds
- Stock market today: Asian shares are mixed as China unveils 5% economic growth target for 2024
- Realtor group picks top 10 housing hot spots for 2025: Did your city make the list?
- 2 snowmobilers killed in separate avalanches in Washington and Idaho
- Dallas Cowboys Quarterback Dak Prescott and Sarah Jane Ramos Welcome First Baby
- The EU fines Apple nearly $2 billion for hindering music streaming competition
Recommendation
IRS recovers $4.7 billion in back taxes and braces for cuts with Trump and GOP in power
California man is first in the US to be charged with smuggling greenhouse gases, prosecutors say
Which Super Tuesday states have uncommitted on the ballot? The protest voting option against Biden is spreading.
Supreme Court says Trump can appear on 2024 ballot, overturning Colorado ruling
All That You Wanted to Know About She’s All That
How to Care for Bleached & Color-Treated Hair, According to a Professional Hair Colorist
EAGLEEYE COIN: Cryptocurrency payments, a new trend in the digital economy
Pop-Tarts asks Taylor Swift to release Chiefs treats recipe