[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4208 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 4208
To provide Federal financial regulators with clawback authority over
executive compensation and additional industry prohibition and civil
money penalty authority with respect to executives whose negligence
caused financial loss to the applicable financial institution, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 20, 2023
Ms. Waters (for herself, Ms. Velazquez, Mr. Sherman, Mr. David Scott of
Georgia, Mr. Cleaver, Mrs. Beatty, Mr. Vargas, Mr. Horsford, Ms. Tlaib,
Ms. Garcia of Texas, and Mr. Green of Texas) introduced the following
bill; which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To provide Federal financial regulators with clawback authority over
executive compensation and additional industry prohibition and civil
money penalty authority with respect to executives whose negligence
caused financial loss to the applicable financial institution, and for
other purposes.
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
Accountability and Consequences Act''.
SEC. 2. SENSE OF CONGRESS.
It is the sense of the Congress that--
(1) financial regulators and law enforcement agencies
should fully exercise the maximum extent of their authorities
to investigate and use available enforcement tools to hold
executive officers and board members at Silicon Valley Bank,
Signature Bank, First Republic Bank, and any other bank that
fails fully accountable for any misconduct in which they are
found to have engaged; and
(2) the Board of Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency, the Board of
Directors of the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Securities and
Exchange Commission, the Federal Housing Finance Agency should
jointly finalize the regulations or guidelines required under
section 956 of the ``Investor Protection and Securities Reform
Act of 2010'', and those regulations or guidelines should
include robust clawback requirements.
SEC. 3. CLAWBACK AUTHORITY.
(a) In General.--Section 8 of the Federal Deposit Insurance Act (12
U.S.C. 1818) is amended by adding at the end the following:
``(x) Recoupment of Compensation From Executive Officers and
Directors.--
``(1) In general.--During any period in which the
Corporation is acting as conservator or receiver for an insured
depository institution, the Corporation may recover, from any
current or former executive officer or director of such insured
depository institution whose negligence caused financial loss
to such insured depository institution, any compensation
received during the 2-year period preceding the date on which
the Corporation was appointed as the conservator or receiver of
the insured depository institution, except that, in the case of
fraud, no time limit shall apply.
``(2) Rulemaking.--The Corporation shall promulgate
regulations to implement the requirements of this subsection,
including defining the term `compensation' to mean any
financial remuneration, including salary, bonuses, incentives,
benefits, severance, deferred compensation, or golden parachute
benefits, and any profits realized from the sale of the
securities of the insured depository institution (or the
securities of an affiliate of the insured depository
institution).''.
(b) Clawback Authority Relating to Orderly Liquidation Authority.--
Section 210(s)(1) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act is amended as follows:
``(1) In general.--The Corporation, as receiver of a
covered financial company, may recover from any current or
former executive officer or director whose negligence caused
financial loss to the covered financial company any
compensation received during the 2-year period preceding the
date on which the Corporation was appointed as the receiver of
the covered financial company, except that, in the case of
fraud, no time limit shall apply.''.
SEC. 4. REMOVAL AND PROHIBITION AUTHORITY IN THE CASE OF INSTITUTION
FAILURE.
(a) In General.--Section 8(e) of the Federal Deposit Insurance Act
(12 U.S.C. 1818(e)) is amended---
(1) by redesignating paragraphs (3), (4), (5), (6), and (7)
as paragraphs (4), (5), (6), (7), and (8), respectively; and
(2) by inserting after paragraph (2) the following:
``(3) Suspension, removal, and prohibition from
participation orders in the case of institution failure.--
Whenever the appropriate Federal banking agency determines that
an institution-affiliated party has negligently caused
financial loss to any insured depository institution that has
failed, the appropriate Federal banking agency for the
depository institution may serve upon such party a written
notice of the agency's intention to prohibit any further
participation by such party, in any manner, in the conduct of
the affairs of any insured depository institution.''.
(b) Conforming Amendment.--The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended--
(1) in section 8--
(A) in subsection (e)--
(i) in paragraph (3), by striking ``under
paragraph (1) or (2)'' each place it occurs and
inserting ``under paragraphs (1), (2), or
(3)''; and
(ii) in paragraph (7), as so redesignated,
by striking ``paragraph (7)(A)'' and inserting
``paragraph (8)(A)'';
(B) in subsection (f), by striking ``subsection
(e)(3)'' and inserting ``subsection (e)(4)'';
(C) in subsection (g)(1)(D)(ii), by striking
``paragraph (1), (2), or (3) of subsection (e)'' and
inserting ``paragraph (1), (2), or (4) of subsection
(e)''; and
(D) in subsection (j), by striking ``subsection
(e)(6)'' and inserting ``subsection (e)(7)''; and
(2) in section 10(k)(6)--
(A) in subparagraph (A)(i), by striking ``section
8(e)(4) for written notices or orders under paragraph
(1) or (2) of section 8(e)'' and inserting ``section
8(e)(5) for written notices or orders under paragraph
(1), (2), or (3) of section 8(e)''; and
(B) in subparagraph (B), by striking ``paragraphs
(6) and (7) of section 8(e)'' and inserting
``paragraphs (7) and (8) of section 8(e)''.
SEC. 5. FINES FOR FAILED BANK EXECUTIVES.
(a) In General.--Section 8(i)(2) of the Federal Deposit Insurance
Act (12 U.S.C. 1818(i)(2)) is amended by--
(1) redesignating subparagraphs (D), (E), (F), (G), (H),
(I), (J), and (K) as paragraphs (E), (F), (G), (H), (I), (J),
(K), and (L), respectively; and:
(2) by inserting after subparagraph (C), the following:
``(D) Fines for contributing to institution
failure.--
``(i) First tier.--Notwithstanding
subparagraphs (A), (B), and (C), any executive
officer or director who has negligently caused
financial loss to any insured depository
institution that has failed shall forfeit and
pay a civil penalty of not more than $25,000
for each day during which such conduct
occurred.
``(ii) Second tier.--Notwithstanding
subparagraphs (A), (B), and (C), any executive
officer or director who knowingly or recklessly
caused financial loss to any insured depository
institution that has failed shall forfeit and
pay a civil penalty in an amount not to exceed
the applicable maximum amount determined under
subparagraph (E) for each day during which such
conduct occurred.''.
(b) Conforming Amendments.--Section 8(i)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(i)(2)), as amended by subsection (a) is
further amended--
(1) in subparagraph (E), by striking ``to subparagraph
(C)'' and inserting ``to subparagraph (C) or (D)'';
(2) in subparagraph (F)--
(A) by striking ``under subparagraph (A), (B), or
(C)'' and inserting ``under subparagraph (A), (B), (C),
or (D)''; and
(B) by striking ``subparagraph (H)'' and inserting
``subparagraph (I)'';
(3) in subparagraph (G), by striking ``under subparagraph
(A), (B), or (C)'' and inserting ``under subparagraph (A), (B),
(C), or (D)''; and
(4) in subparagraph (H), by striking ``under subparagraph
(A), (B), or (C)'' and inserting ``under subparagraph (A), (B),
(C), or (D)''.
SEC. 6. RULE OF CONSTRUCTION.
This Act and the amendments made by this Act may not be construed
to limit the enforcement authorities that financial regulators and law
enforcement agencies had, prior to the date of enactment of this Act,
to hold executive officers and board members of insured depository
institutions and covered financial companies accountable for any
misconduct in which they are found to have engaged.
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