Logo Color


New Senate Banking Committee Members Joining Senators Warren, Hawley, Cortez Masto, and Braun Proposing Updated Legislation

WASHINGTON, D.C. – U.S. Senators JD Vance (R-OH), Elizabeth Warren (D-MA), Katie Britt (R-AL), Kevin Cramer (R-ND), Bob Menendez (D-NJ), Mark Warner (D-VA), Chris Van Hollen (D-MD), Tina Smith (D-MN), Raphael Warnock (D-GA), and John Fetterman (D-PA), all members of the Senate Banking, Housing, and Urban Affairs Committee, joined Senators Mike Braun (R-IN), Josh Hawley (R-MO), and Catherine Cortez Masto (D-NV), to update their original legislation and introduce the Failed Bank Executives Clawback Act – bipartisan legislation that would require federal regulators to claw back up to three years of compensation received by big bank executives, board members, controlling shareholders, and other key decision-makers in the event of a failure or resolution.

The Federal Deposit Insurance Corporation (FDIC) currently has limited ability to claw back executive compensation in the event of a bank failure. The bipartisan Failed Bank Executives Clawback Act would give federal bank regulators the tools they need to hold the executives of big failed banks responsible for the costs that those failures exact on the rest of the banking system and the economy. Specifically, the legislation would: 

  • Require the FDIC to claw back from large bank executives all or part of the compensation they received over the three-year period preceding their bank’s failure or FDIC resolution.
  • Apply to directors, officers, controlling shareholders, and other high-level persons involved in decision-making of banks with $10 billion or more in assets who caused more than a minimal financial loss to, or had a significant adverse effect on, the bank. 
  • Direct funds clawed back from executives into the FDIC’s Deposit Insurance Fund.
  • Extend claw back authorities established by Section 204(a)(3) of the Dodd-Frank Wall Street Reform and Consumer Protection Act to apply to any bank entered into FDIC receivership, not solely those resolved under the FDIC’s Orderly Liquidation Authority. 

Read the legislation here.

“The executives responsible for running their banks into the ground are sitting on millions of dollars in compensation and bonuses. Meanwhile, the American people are bearing the financial burden for their excessive risk taking and gross mismanagement,” said Senator Vance. “This legislation would right that wrong and ensure that failed bank executives are held accountable for the collapse of their institutions – not the American taxpayer.”

“Nearly three months after the collapse of Silicon Valley Bank, a bipartisan group of Senators is demonstrating a serious commitment to pass legislation requiring financial regulators to claw back pay from executives when they implode their bank,” said Senator Elizabeth Warren. “Congress must answer the President’s call for stronger laws to hold failed bank executives accountable, and I’m determined to work with lawmakers on both sides of the aisle in the Senate Banking, Housing, and Urban Affairs Committee to deliver change.”

“Bank executives who make risky investments with customers’ money shouldn’t be permitted to profit in the good times, and then avoid financial consequences when things go south,” said Senator Josh Hawley. “This legislation puts the executives’ own profits on the line, and that’s exactly as it should be.”

“Gross mismanagement by bank executives caused three of the largest bank failures in U.S. history,” said Senator Kevin Cramer. “When this type of blatant negligence occurs, executives of those failed banks should be held accountable for creating instability across the banking sector and leaving taxpayers to foot the bill. This legislation is a good step toward ensuring bank executives engaged in brazen mismanagement are held responsible.”

“When executives drive financial institutions into failure with reckless business practices, they shouldn’t be allowed to use their golden parachutes to escape responsibility while their customers, their employees, and hardworking American families are left footing the bill for the failure of their bank,” said Senator Katie Britt. “This commonsense legislation will dissuade risky bank mismanagement and ensure that bad actors are held accountable.”

“If the federal government is going to step in to cover bank deposits well beyond the $250,000 FDIC limit, bank executives need an extra incentive to manage risk,” said Senator Mike Braun. “This bill to claw back bank executive compensation when the FDIC bails out a bank is necessary.”

“Bank executives shouldn’t be able to cash out and keep multi-million dollar bonuses when their mismanagement causes their institutions to fail,” said Senator Catherine Cortez Masto. “This bipartisan legislation will enable financial regulators to claw that money back and hold these individuals accountable for threatening the stability of Nevada businesses and families.”

“When banks fail, executives should pay the price – not taxpayers. I’m proud to be joining this bipartisan effort to require federal regulators to claw back the compensation of executives that run their banks into the ground,” said Senator Bob Menendez. “Congress needs to do everything in its power to deter reckless behavior that harms hard-working families and the banking system.”

“Executives of failed banks shouldn’t profit from their mismanagement,” said Senator Mark Warner. “This bipartisan legislation would allow regulators to hold managers financially accountable for running a bank into the ground.”

“Top bank executives should not be able to profit from their own malfeasance while leaving depositors at risk and public agencies on the hook to clean up their mess,” said Senator Chris Van Hollen. “The FDIC should have the full authority to claw back these ill-gotten gains.”

“Bank executives who risk the financial wellbeing of their customers and of our economy must be held accountable,” said Senator Tina Smith. “Yet too often, their irresponsible behavior hurts others while they avoid any real consequences. This bipartisan legislation would  ensure real penalties for big bank executives when their risky decisions lead to collapse or failure, adding a layer of protection and accountability to our financial system.”

“When bankers make risky bets that threaten our entire economy, they should not get to cash in. They should be held accountable,” said Senator Reverend Raphael Warnock.