Bipartisan bill would let FDIC claw bonuses back from failed bank execs
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6 months ago
The collapse of Signature Valley Bank is doing something few things can – it’s bringing polar policy opposites, like Senators Elizabeth Warren and JD Vance, together.
They have assembled a group of progressives and conservatives who want to give the FDIC the authority to clawback executive bonuses if a bank fails.
Sen. Elizabeth Warren D-MA: “This is something that’s not Republicans feel one way and Democrats feel a different way. Nobody in America thinks that’s right.”
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 Senators Raphael Warnock and Josh Hawley.
Sen. 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.”
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. This bill would allow the FDIC to take back compensation from the three years preceding the collapse.
Sen. Elizabeth Warren, D-Ma.: “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. 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 by the full senate. The bill has bipartisan co-sponsors in the House too. Straight from DC, I’m Ray Bogan