Failed Bank Executives Clawback Act

Subjects: Finance and Financial Sector


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2972 Introduced in House (IH)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                H. R. 2972

To amend the Federal Deposit Insurance Act to clarify that the Federal 
 Deposit Insurance Corporation and appropriate Federal regulators have 
  the authority to claw back certain compensation paid to executives.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 27, 2023

 Ms. Porter (for herself, Mrs. Spartz, Mr. Gallego, Mr. Buck, and Ms. 
    Perez) introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To amend the Federal Deposit Insurance Act to clarify that the Federal 
 Deposit Insurance Corporation and appropriate Federal regulators have 
  the authority to claw back certain compensation paid to executives.

    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 ``Failed Bank Executives Clawback 
Act''.

SEC. 2. CLAW BACK.

    Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 
1818(b)) is amended by inserting after paragraph (8) the following:
            ``(9) Clawback.--
                    ``(A) Definition.--In this paragraph, the term 
                `covered compensation' means--
                            ``(i) salary;
                            ``(ii) bonuses;
                            ``(iii) any compensation that is granted, 
                        earned, or vested based wholly or in part upon 
                        the attainment of any financial reporting 
                        measure or other performance metric;
                            ``(iv) equity-based compensation;
                            ``(v) time- or service-based awards;
                            ``(vi) awards based on nonfinancial 
                        metrics; and
                            ``(vii) any profits realized from the 
                        buying or selling of securities.
                    ``(B) Clawback.--
                            ``(i) Liability of institution-affiliated 
                        party.--An institution-affiliated party that is 
                        substantially responsible for the condition of 
                        the insured depository institution is liable to 
                        the Corporation for any covered compensation 
                        clawed back under clause (ii).
                            ``(ii) Required clawbacks.--In the case of 
                        insolvency or resolution of any insured 
                        depository institution, the Corporation shall 
                        claw back all or part of the covered 
                        compensation received by an institution-
                        affiliated party during the preceding 5 years 
                        as is necessary to prevent unjust enrichment 
                        and assure that the party bears losses 
                        consistent with the responsibility of the 
                        party.
                            ``(iii) Deposit.--Any covered compensation 
                        clawed back under this subparagraph shall be 
                        deposited into the Deposit Insurance Fund or 
                        into the general fund of the Treasury.''.

SEC. 3. ORDERLY LIQUIDATION OF COVERED FINANCIAL COMPANIES.

    Section 204 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5384) is amended by adding at the end the 
following:
    ``(e) Clawback.--
            ``(1) Definition.--In this subsection, the term `covered 
        compensation' means--
                    ``(A) salary;
                    ``(B) bonuses;
                    ``(C) any compensation that is granted, earned, or 
                vested based wholly or in part upon the attainment of 
                any financial reporting measure or other performance 
                metric;
                    ``(D) equity-based compensation;
                    ``(E) time- or service-based awards;
                    ``(F) awards based on nonfinancial metrics; and
                    ``(G) any profits realized from the buying or 
                selling of securities.
            ``(2) Clawback.--
                    ``(A) Liability of institution-affiliated party.--
                An institution-affiliated party that is substantially 
                responsible for the condition of a covered financial 
                company is liable to the Corporation for any covered 
                compensation clawed back under subparagraph (B).
                    ``(B) Required clawbacks.--In the case of 
                insolvency or resolution of any covered financial 
                company, the Corporation shall claw back all or part of 
                the covered compensation received by an institution-
                affiliated party during the preceding 5 years as is 
                necessary to prevent unjust enrichment and assure that 
                the party bears losses consistent with the 
                responsibility of the party.
                    ``(C) Deposit.--Any covered compensation clawed 
                back under this subparagraph shall be deposited into 
                the Deposit Insurance Fund or into the general fund of 
                the Treasury.''.

SEC. 4. LIABILITY TO THE FEDERAL DEPOSIT INSURANCE CORPORATION.

    The Bank Holding Company Act (12 U.S.C. 1841 et seq.) is amended by 
adding at the end the following:

``SEC. 15. LIABILITY TO THE FEDERAL DEPOSIT INSURANCE CORPORATION.

    ``(a) In General.--Any bank holding company that has control over 
an insured depository institution for which the Corporation is 
appointed and acts as receiver under section 11 of the Federal Deposit 
Insurance Corporation Act shall be liable to the Corporation for--
            ``(1) any payments from the Deposit Insurance Fund 
        established under section 11 of the Federal Deposit Insurance 
        Act to insured depositors of such insured depository 
        institution;
            ``(2) any costs incurred by the Corporation as receiver of 
        such insured depository institution; and
            ``(3) any interest on the amounts described in paragraphs 
        (1) and (2).
    ``(b) Lien Against All Assets.--
            ``(1) In general.--Any liability of a bank holding company 
        to the Corporation under subsection (a) shall be secured by a 
        lien on all assets of such bank holding company.
            ``(2) Specifications.--Any lien arising under this 
        subsection--
                    ``(A) shall be deemed to be automatically 
                perfected;
                    ``(B) shall have priority over all other liens, 
                irrespective of their date of creation or perfection; 
                and
                    ``(C) may not be avoided in a proceeding under 
                title 11, United States Code.
    ``(c) Priority of Liability.--
            ``(1) In general.--Any liability of a bank holding company 
        to the Corporation under subsection (a) shall have payment 
        priority over all other liabilities of and interests in the 
        bank holding company.
            ``(2) Clarifying rule.--No payment shall be made to any 
        other creditor or shareholder of the bank holding company until 
        the liability to the Corporation under this section has been 
        paid in full.
    ``(d) Definitions.--In this section:
            ``(1) Insured depository institution.--The term `insured 
        depository institution' has the meaning given the term in 
        section 3 of the Federal Deposit Insurance Act.
            ``(2) Corporation.--The term `Corporation' means the 
        Federal Deposit Insurance Corporation.''.
                                 &lt;all&gt;
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