The collapse of Signature Valley Bank is doing something few things can: bringing polar policy opposites, like Sens. Elizabeth Warren, D-Mass., and J.D. Vance, R-Ohio, together. A group of progressives and conservatives want to give the FDIC the authority to claw back executive bonuses if a bank fails. 

“This is something that’s not Republicans feel one way and Democrats feel a different way. Nobody in America thinks that’s right,” Sen. Elizabeth Warren D-Mass., told Straight Arrow News. 

The Failed Bank Executives Clawback Act would apply to directors, officers, controlling shareholders, and other high-level employees involved in decision-making at banks with $10 billion or more in assets. The bonus money would be put into the FDIC Deposit Insurance Fund. 

In addition to Warren and Vance, sponsors include Sens. Raphael Warnock, D-Ga., and Josh Hawley, R-Mo.  

“I think we ought to give the FDIC the tools to go in and say, ‘If your bank fails, and you are in charge at the time, you should have to fork over the money that you made.’ I just think that that is a good basic, common sense solution here,” Hawley said. 

SVB raised eyebrows after it was revealed bonuses were paid out hours before the bank collapsed. Those were scheduled payments for work performed in 2022. According to reports, SVB’s CEO received $9.9 million in compensation in 2022, including a $1.5 million cash bonus. Other SVB executives made a collective $17 million. 

The collapse of SVB also created conditions in the banking market that also led to the failure of Signature and First Republic Banks. 

The bipartisan bill would allow the FDIC to take back compensation from the three years preceding the collapse. 

“It was years before the crash when they said, ‘By not doing the interest rate hedge, we can save a lot of money and boost our short term profits and start paying ourselves these huge bonuses.’ And that’s exactly what the executives did,” Warren said. “So by having a longer reach back, we want them to understand that, yes, you may make money in the short run right in front of you. But you’re gonna have to pay all that back if you crash your bank.”

The bill’s sponsors want the Banking Committee to approve the bill in the near future so it can move on for a vote in the full Senate. The bill has bipartisan co-sponsors in the House too.