Failed Bank Executives Clawback Act

Bill: 118-s-1790
Sponsor: full_name: Sen. Warren, Elizabeth [D-MA]
Introduced: 2023-06-01
Policy area: Finance and Financial Sector
Latest action: action_date: 2023-06-01
text: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Summaries:
action_date: 2023-06-01
action_desc: Introduced in Senate
text: <p><b>Failed Bank Executives Clawback Act </b></p> <p>This bill requires the Federal Deposit Insurance Corporation (FDIC) to claw back compensation from specific responsible parties in case of a large insured depository institution's insolvency, resolution, or receivership. This clawback requirement applies to an entity (including a director, shareholder, or other person who participates in the conduct of the institution's affairs) that caused more than a minimal financial loss to, or a significant adverse effect on, the insured depository institution. The compensation subject to the clawback requirement includes salary, bonuses, awards, and any profits realized from the buying or selling of securities during the preceding three years. </p> <p>The bill also expands the authority of the FDIC to claw back compensation of parties responsible for financial losses incurred by a financial company regardless of the process by which it is appointed receiver.</p>

tv_txt: II 118th CONGRESS 1st Session S. 1790 IN THE SENATE OF THE UNITED STATES June 1, 2023 Ms. Warren (for herself, Mr. Hawley , Ms. Cortez Masto , Mr. Braun , Mr. Vance , Mr. Menendez , Mr. Warner , Mr. Van Hollen , Ms. Smith , Mrs. Britt , Mr. Cramer , Mr. Warnock , and Mr. Fetterman ) 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 clarify that the Federal Deposit Insurance Corporation and appropriate Federal regulators have the authority to claw back certain compensation paid to executives, and for other purposes.

1. Short title This Act may be cited as the Failed Bank Executives Clawback Act . 2. Clawback 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) Definitions In this paragraph: (i) Covered compensation 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. (ii) Covered party (I) In general The term covered party means an entity described in subclause (II) with respect to an insured depository institution that caused more than a minimal financial loss to, or a significant adverse effect on, the insured depository institution. (II) Entities described An entity described in this subclause is any of the following: (aa) Any director, officer, or controlling stockholder (other than a bank holding company or savings and loan holding company) of, or agent for, an insured depository institution. (bb) Any other person who has filed or is required to file a change-in-control notice with the appropriate Federal banking agency under section 7(j). (cc) Any shareholder (other than a bank holding company or savings and loan holding company), joint venture partner, and any other person as determined by the appropriate Federal banking agency (by regulation or case-by-case) who participates in the conduct of the affairs of an insured depository institution. (B) Clawback (i) Liability of covered party A covered party with respect to an insured depository institution with total assets more than $10,000,000,000 is liable to the Corporation for any covered compensation clawed back under clause (ii). (ii) Required clawbacks In the case of insolvency, resolution, or the appointment of the Corporation as receiver of any insured depository institution with total assets more than $10,000,000,000, the Corporation shall claw back all or part of the covered compensation received by any covered party with respect to the insured depository institution during the preceding 3 years. (iii) Deposit Any covered compensation clawed back under this subparagraph shall be deposited into the Deposit Insurance Fund. . 3. Orderly liquidation of covered financial companies Section 204(a)(3) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5384(a)(3) ) is amended by striking the financial company and inserting of a financial company for which the Corporation is appointed receiver, regardless of the process by which the Corporation is appointed, .