I 
112TH CONGRESS 
2D SESSION 
H. R. 5860 
To prohibit individuals from insuring against possible losses from having 
to repay illegally-received compensation or from having to pay civil pen-
alties, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 30, 2012 
Mr. FRANK of Massachusetts (for himself, Mr. WAXMAN, and Mr. PETERSON) 
introduced the following bill; which was referred to the Committee on Fi-
nancial Services, and in addition to the Committee on Agriculture, for a 
period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To prohibit individuals from insuring against possible losses 
from having to repay illegally-received compensation or 
from having to pay civil penalties, and for other pur-
poses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Executive Compensa-
tion Clawback Full Enforcement Act’’. 
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SEC. 2. NO AVOIDANCE OF PERSONAL LIABILITY. 
(a) IN GENERAL.—An officer, director, employee, or 
other institution-affiliated party of a depository institu-
tion, depository institution holding company, or nonbank 
financial company who is required by a Federal financial 
regulatory law that provides for personal liability, or any 
rule or order promulgated by a Federal financial regu-
latory agency thereunder, to repay previously earned com-
pensation or pay a civil money penalty— 
(1) shall be personally liable for the amounts so 
owed; and 
(2) may not, directly or indirectly, insure or 
hedge against, or otherwise transfer the risks associ-
ated with, personal liability for the amounts so owed. 
(b) RULE OF CONSTRUCTION.—Subsection (a) shall 
not preclude a person from— 
(1) being provided funds necessary to defend 
against a previously earned compensation recovery 
or civil money penalty described under subsection 
(a)— 
(A) from the relevant depository institu-
tion, depository institution holding company, or 
nonbank financial company; 
(B) under an insurance policy; or 
(C) pursuant to court order; or 
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(2) obtaining insurance that protects such per-
son from being held personally liable for— 
(A) penalties, judgments, or other amounts 
assessed against a depository institution, depos-
itory institution holding company, or nonbank 
financial company at the company level; or 
(B) unintentional outcomes associated with 
the ordinary exercise of trade or business judg-
ment, unless the effects of such judgment result 
in personal liability under a Federal financial 
regulatory law that provides for personal liabil-
ity. 
(c) APPLICATION TO FOREIGN NONBANK FINANCIAL 
COMPANIES.—Subsection (a) shall only apply to an offi-
cer, director, employee, or other institution-affiliated party 
of a foreign nonbank financial company to the extent that 
such officer, director, employee, or other institution-affili-
ated party is based in the United States. 
(d) DEFINITIONS.—For purposes of this Act: 
(1) COMPENSATION.—The term ‘‘compensa-
tion’’ means anything of value, regardless of the 
form in which provided, that is given by a depository 
institution, depository institution holding company, 
or nonbank financial company to an officer, director, 
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employee, or other institution-affiliated party in re-
turn for that individual’s service to such entity. 
(2) DEPOSITORY INSTITUTION.—The term ‘‘de-
pository institution’’ has the meaning given such 
term under section 3 of the Federal Deposit Insur-
ance Act (12 U.S.C. 1813). 
(3) DEPOSITORY INSTITUTION HOLDING COM-
PANY.—The term ‘‘depository institution holding 
company’’ means— 
(A) a bank holding company, as defined 
under section 102 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act 
(12 U.S.C. 5311); and 
(B) a savings and loan holding company, 
as defined under section 10 of the Home Own-
ers’ Loan Act (12 U.S.C. 1467a). 
(4) FEDERAL FINANCIAL REGULATORY AGEN-
CY.—The term ‘‘Federal financial regulatory agen-
cy’’ means— 
(A) the Board of Governors of the Federal 
Reserve System; 
(B) the Bureau of Consumer Financial 
Protection; 
(C) the Commodity Futures Trading Com-
mission; 
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(D) the Federal Deposit Insurance Cor-
poration; 
(E) the Federal Housing Finance Agency; 
(F) the Federal Trade Commission, to the 
extent the Commission exercises authority over 
a depository institution, depository institution 
holding company, or nonbank financial com-
pany; 
(G) the Office of the Comptroller of the 
Currency; and 
(H) the Securities and Exchange Commis-
sion. 
(5) FEDERAL FINANCIAL REGULATORY LAW.— 
The term ‘‘Federal financial regulatory law’’ 
means— 
(A) the Bank Holding Company Act of 
1956; 
(B) the Commodity Exchange Act; 
(C) the Dodd-Frank Wall Street Reform 
and Consumer Protection Act; 
(D) section 111 of the Emergency Eco-
nomic Stabilization Act of 2008; 
(E) the Federal Deposit Insurance Act; 
(F) the Federal Home Loan Bank Act; 
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(G) the Federal Home Loan Mortgage 
Corporation Act; 
(H) the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992; 
(I) the Federal National Mortgage Associa-
tion Charter Act; 
(J) the Federal Trade Commission Act, to 
the extent such Act applies to depository insti-
tutions, depository institution holding compa-
nies, or nonbank financial companies; 
(K) the Gramm-Leach-Bliley Act; 
(L) the Home Owners’ Loan Act; 
(M) the Housing and Economic Recovery 
Act of 2008; 
(N) the International Banking Act of 
1978; 
(O) the International Lending Supervision 
Act of 1983; 
(P) title LXII of the Revised Statutes of 
the United States; and 
(Q) the securities laws (as defined under 
section 3(a) of the Securities Exchange Act of 
1934), to the extent such laws apply to deposi-
tory institutions, depository institution holding 
companies, or nonbank financial companies. 
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(6) FEDERAL
FINANCIAL
REGULATORY
LAW 
THAT
PROVIDES
FOR
PERSONAL
LIABILITY.—The 
term ‘‘Federal financial regulatory law that provides 
for personal liability’’ means any provision of a Fed-
eral financial regulatory law that— 
(A) directly requires recovery of compensa-
tion previously paid to, or directly requires as-
sessment of a civil money penalty against, a di-
rector, officer, employee, or other institution-af-
filiated party of a depository institution, deposi-
tory institution holding company, or nonbank fi-
nancial company; or 
(B) authorizes a Federal financial regu-
latory agency to require, by rule or order, recov-
ery of compensation previously paid to, or as-
sess a civil money penalty against, a director, 
officer, employee, or other institution-affiliated 
party of a depository institution, depository in-
stitution holding company, or nonbank financial 
company. 
(7) 
INSTITUTION-AFFILIATED
PARTY.—The 
term ‘‘institution-affiliated party’’— 
(A) has the meaning given such term 
under subsection (u) of section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813); and 
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(B) shall apply with respect to a depository 
institution, depository institution holding com-
pany, and nonbank financial company to the 
same extent as such subsection applies to an in-
sured depository institution. 
(8) NONBANK FINANCIAL COMPANY.—The term 
‘‘nonbank financial company’’ means— 
(A) a nonbank financial company, as de-
fined under section 102 of the Dodd-Frank 
Wall Street Reform and Consumer Protection 
Act (12 U.S.C. 5311); 
(B) the Federal National Mortgage Asso-
ciation; 
(C) the Federal Home Loan Mortgage 
Corporation; and 
(D) the Federal Home Loan Banks. 
Æ 
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