I 

116TH CONGRESS 

1ST SESSION H. R. 3885 

To amend the Bank Holding Company Act of 1956 to defer part of the 

compensation of senior employees of large bank holding companies (and 

their subsidiaries) for 10 years, to use such deferred amounts to pay 

any civil or criminal fines that may be levied on the bank holding 

company (or subsidiary), and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 23, 2019 

Ms. GABBARD introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend the Bank Holding Company Act of 1956 to defer 

part of the compensation of senior employees of large 

bank holding companies (and their subsidiaries) for 10 

years, to use such deferred amounts to pay any civil 

or criminal fines that may be levied on the bank holding 

company (or subsidiary), and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Wall Street Banker 

5 Accountability for Misconduct Act of 2019’’. 


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1 SEC. 2. FINDINGS. 

2 The Congress finds the following: 

3 (1) Senior employees of major bank holding 

4 companies receive extraordinary pay packages, even 

5 when they oversee massive frauds and financial mis6 conduct. 

7 (2) Widespread financial misconduct by indi8 vidual Wall Street bankers led to the 2008 financial 

9 crisis, which caused the Great Recession. The De10 partment of Justice brought litigation against every 

11 major bank, resulting in more than 

12 $163,000,000,000 in fines. 

13 (3) This misconduct resulted from the actions 

14 of individuals and was a direct result of a banking 

15 culture that rewards bad behavior. 

16 (4) Despite the actions of individuals, Wall 

17 Street banks paid billions of dollars in fines out of 

18 monies that otherwise were owned and could be paid 

19 in dividends to shareholders. While culpable bankers 

20 continued to receive extraordinary pay, innocent 

21 shareholders paid the price for banker misconduct. 

22 (5) In the aftermath of the Great Recession, 

23 and after further misconduct in the financial serv24 ices industry, the Federal Reserve Bank of New 

25 York has urged financial firms to reevaluate and reVerDate Sep 11 2014 05:27 Jul 30, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3885.IH H3885

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1 form their compensation incentive structures to align 

2 with shareholders and customers interests. 

3 (6) Misaligned incentives within the banking in4 dustry continue to fail to hold Wall Street executives 

5 and their senior employees accountable for their ac6 tions. 

7 SEC. 3. DEFERMENT OF SENIOR EMPLOYEE COMPENSA8 TION. 

9 The Bank Holding Company Act of 1956 (12 U.S.C. 

10 1841 et seq.) is amended by inserting after section 5 the 

11 following: 

12 ‘‘SEC. 6. DEFERMENT OF SENIOR EMPLOYEE COMPENSA13 TION. 

14 ‘‘(a) DEFERMENT FUND.—Each covered bank hold15 ing company and each subsidiary of a covered bank hold16 ing company shall establish a deferment fund, which 

17 shall— 

18 ‘‘(1) only contain compensation deferred under 

19 subsection (b); and 

20 ‘‘(2) only be used as permitted by this section. 

21 ‘‘(b) DEFERMENT OF COMPENSATION.—Each cov22 ered bank holding company and each subsidiary of a cov23 ered bank holding company shall— 

24 ‘‘(1) each year, defer the compensation of each 

25 senior employee of the bank holding company or 


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1 subsidiary in an amount equal to at least 50 percent 

2 of the amount that the employee’s total compensa3 tion for the year exceeds 10 times the compensation 

4 of the median paid employee of the consolidated 

5 bank holding company for the year; 

6 ‘‘(2) place all compensation deferred under 

7 paragraph (1) into the deferment fund of the bank 

8 holding company or subsidiary; and 

9 ‘‘(3) after the end of the 10-year period begin10 ning on the date the compensation was deferred, if 

11 sufficient funds remain in the deferment fund, pay 

12 the senior employee the amount of compensation de13 ferred at the beginning of the 10-year period. 

14 ‘‘(c) USE OF DEFERMENT FUND TO PAY FINES.— 

15 If a covered bank holding company or subsidiary of a cov16 ered bank holding company is subject to a civil or criminal 

17 fine, the bank holding company or subsidiary shall first 

18 pay such fine out of amounts contained in the deferment 

19 fund of the bank holding company or subsidiary. 

20 ‘‘(d) CANCELLATION OF COMPENSATION THAT CAN21 NOT BE PAID FROM DEFERMENT FUND.—Each covered 

22 bank holding company and each subsidiary of a covered 

23 bank holding company shall have in place a policy that 

24 cancels any compensation deferred under subsection (b) 


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1 that cannot be repaid as described under subsection 

2 (b)(3), due to the deferment fund lacking sufficient funds. 

3 ‘‘(e) TREATMENT OF DEFERRED COMPENSATION OF

4 EX-EMPLOYEES.—With respect to an individual that has 

5 compensation deferred pursuant to subsection (b), but is 

6 no longer employed by the applicable bank holding com7 pany or subsidiary, if the bank holding company or sub8 sidiary is required to pay a fine from its deferment fund 

9 for misconduct that occurred after the individual was no 

10 longer employed by the bank holding company or sub11 sidiary, the bank holding company or subsidiary shall seg12 regate the individual’s deferred compensation from other 

13 amounts in the deferment fund and shall not use such seg14 regated amounts for any purpose other than repaying the 

15 individual pursuant to subsection (b)(3) or for the pay16 ment of another fine for misconduct that occurred while 

17 the individual was still employed by the bank holding com18 pany or subsidiary. 

19 ‘‘(f) RULEMAKING.—The Board may issue such rules 

20 as the Board determines necessary to carry out this sec21 tion. 

22 ‘‘(g) DEFINITIONS.—In this section: 

23 ‘‘(1) COMPENSATION.—With respect to an em24 ployee, the term ‘compensation’ means any financial 

25 remuneration, including salary, bonuses, incentives, 


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1 benefits, severance, deferred compensation, or golden 

2 parachute benefits, and any profits that would be re3 alized from the sale of the securities of the company 

4 employing the employee. 

5 ‘‘(2) CONSOLIDATED BANK HOLDING COM6 PANY.—With respect to a bank holding company, 

7 the term ‘consolidated bank holding company’ means 

8 the bank holding company and all subsidiaries of the 

9 bank holding company. 

10 ‘‘(3) COVERED BANK HOLDING COMPANY.—The 

11 term ‘covered bank holding company’ means a con12 solidated bank holding company with more than 

13 $250,000,000,000 in consolidated assets. 

14 ‘‘(4) SENIOR EMPLOYEE.—The term ‘senior 

15 employee’ means an employee of a covered bank 

16 holding company or a subsidiary of the covered bank 

17 holding company who— 

18 ‘‘(A) has total compensation of more than 

19 $1,000,000; 

20 ‘‘(B) is identified by the bank holding com21 pany as one of the 100 most senior officers of 

22 the consolidated bank holding company; 

23 ‘‘(C) receives one of the 100 largest com24 pensation packages of the consolidated bank 

25 holding company; 


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1 ‘‘(D) receives compensation that is more 

2 than 10 times the compensation of the median 

3 paid employee of the consolidated bank holding 

4 company; or 

5 ‘‘(E) has the authority to commit or ex6 pose 0.5 percent or more of the capital of the 

7 consolidated bank holding company.’’. 

Æ 


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