Bank Management Accountability Act

Subjects: Finance and Financial Sector, Administrative law and regulatory procedures, Bank accounts, deposits, capital, Banking and financial institutions regulation, Civil actions and liability, Consumer affairs, Corporate finance and management, Federal Deposit Insurance Corporation (FDIC), Financial crises and stabilization, Wages and earnings


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1181 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                S. 1181

    To amend the Federal Deposit Insurance Act to improve financial 
                   stability, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 18, 2023

Mr. Reed (for himself and Mr. Grassley) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
    To amend the Federal Deposit Insurance Act to improve financial 
                   stability, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Bank Management Accountability 
Act''.

SEC. 2. SYSTEMIC RISK DETERMINATION.

    (a) In General.--Section 13(c)(4)(G) of the Federal Deposit 
Insurance Act (12 U.S.C. 1823(c)(4)(G)) is amended by adding at the end 
the following:
                            ``(vi) Recoupment of compensation from 
                        senior executives and directors.--
                                    ``(I) In general.--The Corporation, 
                                as receiver or conservator of an 
                                insured depository institution under 
                                clause (i), may recover from any 
                                current or former senior executive or 
                                director of the insured depository 
                                institution, or of a covered affiliate 
                                with respect to the insured depository 
                                institution, who is substantially 
                                responsible for the failed condition of 
                                the insured depository institution, any 
                                compensation received during the 2-year 
                                period preceding the date on which the 
                                Corporation was appointed as the 
                                receiver or conservator of the insured 
                                depository institution, except that, in 
                                the case of fraud, no time limit shall 
                                apply.
                                    ``(II) Cost considerations.--In 
                                seeking to recover any compensation 
                                under subclause (I), the Corporation 
                                shall weigh the financial and deterrent 
                                benefits of that recovery against the 
                                cost of executing the recovery.
                                    ``(III) Personal liability.--Any 
                                liability insurance policy for a senior 
                                executive or director described in 
                                subclause (I) shall exclude from 
                                coverage any liability under this 
                                clause.
                            ``(vii) Prohibition authority.--
                                    ``(I) In general.--The Corporation 
                                may take any action authorized by 
                                subclause (II), if the Corporation 
                                determines that--
                                            ``(aa) a senior executive 
                                        or a director of an insured 
                                        depository institution with 
                                        respect to which the 
                                        Corporation has taken action or 
                                        provided assistance under 
                                        clause (i), or of a covered 
                                        affiliate with respect to such 
                                        an insured depository 
                                        institution, before the 
                                        appointment of the Corporation 
                                        as receiver or conservator, 
                                        has, directly or indirectly--

                                                    ``(AA) violated any 
                                                law or regulation;

                                                    ``(BB) violated any 
                                                cease-and-desist order 
                                                that has become final;

                                                    ``(CC) violated any 
                                                condition imposed in 
                                                writing by a Federal 
                                                agency in connection 
                                                with any action on any 
                                                application, notice, or 
                                                request by the insured 
                                                depository institution 
                                                or covered affiliate 
                                                (as applicable) or the 
                                                senior executive or 
                                                director (as 
                                                applicable);

                                                    ``(DD) violated any 
                                                written agreement 
                                                between the insured 
                                                depository institution 
                                                or covered affiliate 
                                                (as applicable) and the 
                                                Federal agency 
                                                described in subitem 
                                                (CC);

                                                    ``(EE) engaged or 
                                                participated in any 
                                                unsafe or unsound 
                                                practice; or

                                                    ``(FF) committed or 
                                                engaged in any act, 
                                                omission, or practice 
                                                that constitutes a 
                                                breach of the fiduciary 
                                                duty of that senior 
                                                executive or director; 
                                                and

                                            ``(bb) by reason of the 
                                        violation, practice, or breach 
                                        described in any subitem of 
                                        item (aa), that senior 
                                        executive or director has 
                                        received financial gain or 
                                        other benefit, and that 
                                        violation, practice, or breach 
                                        contributed to the failure of 
                                        the insured depository 
                                        institution.
                                    ``(II) Authorized actions.--The 
                                Corporation may serve upon a senior 
                                executive or director with respect to 
                                whom the Corporation has made a 
                                determination under subclause (I) a 
                                written notice of the intention of the 
                                Corporation to prohibit any further 
                                participation by that individual, in 
                                any manner, in the conduct of the 
                                affairs of any financial company for a 
                                period of time determined by the 
                                Corporation to be commensurate with 
                                that violation, practice, or breach, 
                                except that such period shall be not 
                                less than 2 years.
                            ``(viii) Definitions.--In this 
                        subparagraph:
                                    ``(I) Compensation.--The term 
                                `compensation' means any direct or 
                                indirect financial remuneration 
                                received from an insured depository 
                                institution, or from a covered 
                                affiliate with respect to an insured 
                                depository institution, including 
                                salary, bonuses, incentives, benefits, 
                                severance pay, deferred compensation, 
                                golden parachute benefits, benefits 
                                derived from an employment contract or 
                                other compensation or benefit 
                                arrangement, perquisites, stock option 
                                plans, post-employment benefits, 
                                profits realized from a sale of 
                                securities in the insured depository 
                                institution or the covered affiliate 
                                (as applicable), or any cash or noncash 
                                payments or benefits granted to or for 
                                the benefit of a senior executive or 
                                director.
                                    ``(II) Covered affiliate.--The term 
                                `covered affiliate' means, with respect 
                                to an insured depository institution, 
                                any--
                                            ``(aa) bank holding company 
                                        (as defined in section 2(a) of 
                                        the Bank Holding Company Act of 
                                        1956 (12 U.S.C. 1841(a))) that 
                                        controls the insured depository 
                                        institution;
                                            ``(bb) savings and loan 
                                        holding company (as defined in 
                                        section 10(a) of the Home 
                                        Owners' Loan Act (12 U.S.C. 
                                        1467a(a))) that directly or 
                                        indirectly controls the insured 
                                        depository institution;
                                            ``(cc) subsidiary of the 
                                        insured depository institution; 
                                        or
                                            ``(dd) affiliate (as 
                                        defined in section 2 of the 
                                        Bank Holding Company Act of 
                                        1956 (12 U.S.C. 1841(k))) of 
                                        the insured depository 
                                        institution.
                                    ``(III) Director.--The term 
                                `director' means a member of the board 
                                of directors of a company, or of a 
                                board or committee performing a similar 
                                function to a board of directors, who 
                                has authority to vote on matters before 
                                the board or committee.
                                    ``(IV) Financial company.--The term 
                                `financial company' has the meaning 
                                given the term in section 201(a) of the 
                                Dodd-Frank Wall Street Reform and 
                                Consumer Protection Act (12 U.S.C. 
                                5381(a)).
                                    ``(V) Senior executive.--The term 
                                `senior executive'--
                                            ``(aa) means any individual 
                                        who participates or has 
                                        authority to participate (other 
                                        than in the capacity of a 
                                        director) in major policymaking 
                                        functions of a company, 
                                        regardless of whether the 
                                        individual has an official 
                                        title or the title of the 
                                        individual designates the 
                                        individual as an assistant; and
                                            ``(bb) includes the 
                                        chairman of the board, the 
                                        president, any vice president, 
                                        the secretary, the treasurer or 
                                        chief financial officer, the 
                                        general partner, and any 
                                        manager of a company, unless 
                                        the individual--

                                                    ``(AA) is excluded, 
                                                by resolution of the 
                                                board of directors, the 
                                                bylaws, the operating 
                                                agreement, or the 
                                                partnership agreement 
                                                of the company, from 
                                                participation (other 
                                                than in the capacity of 
                                                a director) in major 
                                                policymaking functions 
                                                of the company; and

                                                    ``(BB) does not 
                                                actually participate in 
                                                major policymaking 
                                                functions of the 
                                                company.''.

    (b) Regulations.--The Federal Deposit Insurance Corporation shall 
promulgate regulations to administer and carry out this section, in a 
manner that is not less stringent than the manner set forth in section 
380.7 of title 12, Code of Federal Regulations (as in effect on the 
date of enactment of this Act).

SEC. 3. ORDERLY LIQUIDATION AUTHORITY.

    Title II of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5381 et seq.) is amended--
            (1) in section 210(s) (12 U.S.C. 5390(s)), by adding at the 
        end the following:
            ``(4) Personal liability.--Any liability insurance policy 
        for a senior executive or director described in paragraph (1) 
        shall exclude from coverage any liability under this 
        subsection.''; and
            (2) in section 213(b) (12 U.S.C. 5393(b))--
                    (A) in paragraph (1)(C), by inserting ``and'' at 
                the end;
                    (B) in paragraph (2), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking paragraph (3).
                                 &lt;all&gt;
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