A bipartisan group of senators introduced legislation on Wednesday to claw back some or all of the top executives’ compensation from the five years leading up to bank failures, following the high-profile collapse of Silicon Valley Bank and Signature Bank earlier this month.
The bill — proposed by Sens. Elizabeth Warren (D-Mass.), Catherine Cortez Masto (D-Nev.), Josh Hawley (R-Mo.) and Mike Braun (R-Ind.) — would allow the Federal Deposit Insurance Corporation (FDIC) to recoup up to five years’ worth of compensation from executives at any bank that requires a federal takeover.
“Americans are sick and tired of fat cat bankers paying themselves handsomely while risking other people’s hard earned money,” Warren, who has been an outspoken voice in the push for stronger banking regulations, said in a statement.
“It’s time for Congress to step up and strengthen the law so bank executives bear the cost of failure, not line their pockets and walk away scot-free,” she added.
Silicon Valley Bank and Signature Bank collapsed within days of one another earlier this month, becoming the second- and third-largest bank failures in U.S. history.
Michael Barr, the Federal Reserve’s vice chair for supervision, testified to Congress on Tuesday that Silicon Valley Bank’s demise was the result of its management’s failure to address “clear” interest rate and liquidity risks.
“The Federal Reserve Bank brought forward these problems to the bank, and they failed to address them in a timely way — that exposure led the firm to be highly vulnerable to a shock,” Barr said, according to The New York Times.