Porter, Bipartisan Colleagues Introduce Bill To Hold Failed Bank Executives Accountable
Legislation would empower federal watchdogs to claw back reckless executives’ compensation
Washington, April 27, 2023
Tags: Protecting Consumers
Today, Representatives Katie Porter (D-CA), Victoria Spartz (R-IN), Ruben Gallego (D-AZ), Ken Buck (R-CO), and Marie Gluesenkamp Perez (D-WA) introduced legislation to hold executives accountable for bank failures. The bipartisan Failed Bank Executives Clawback Act directly targets unjust compensation earned by executives who threaten our financial system and economy.
“Bank executives shouldn’t be rewarded when they oversee bank failures, and they shouldn’t be incentivized to put Americans’ money at heightened risk for bigger payouts,” said Rep. Porter. “Democrats and Republicans agree: when leaders at big banks engage in reckless risk-taking, they should be held accountable.”
Following the collapse of Silicon Valley Bank and Signature Bank in March 2023, reports emerged that bank executives made millions in stock sales and bonuses from their reckless management in the months leading up to the bank failures. The bipartisan Failed Bank Executives Clawback Act would empower federal watchdogs to claw back compensation from bank executives who profit off of their bank’s mismanagement of deposits.
“We cannot be a country with institutions ‘too big to fail’ and policies where reckless executives are not held accountable and shift the risk to taxpayers. The general public should not be on the hook for bad business decisions,” Rep. Spartz said.
“Hardworking Arizonans and small businesses were the ones who paid the price when Silicon Valley Bank failed. All the while, SVB’s executives ran off into the sunset fat with cash from bonuses they paid themselves. That’s not how our system should work, and we should claw back those types of pay-outs. But SVB’s failure was years in the making - we need these bank executives to have skin in the game. I am proud to lead this bipartisan legislation to hold bank executives accountable when their mismanagement and incompetence hurts the American people,” said Rep. Gallego.
“Working Americans should not have to foot the bill for the failures of Silicon Valley Bank executives,” said Rep. Buck. “I’m proud to lead this bipartisan bill to make bank CEOs more accountable for any risky financial decisions they make.”
“After Silicon Valley Bank executives lined their pockets with big bonuses, people, businesses, and the entire economy suffered. We need to make sure the people who make reckless decisions that throw the banking system into turmoil can’t walk away with millions of dollars as rewards, and this bipartisan bill makes that possible,” said Rep. Gluesenkamp Perez.
Senators Elizabeth Warren (D-MA), Josh Hawley (R-MO), Catherine Cortez Masto (D-NV), and Mike Braun (R-IN) introduced a companion bill in the Senate.
As a bankruptcy law professor and consumer protection attorney, Congresswoman Porter understands the importance of protecting depositors and advocating for a stable financial system. Back in 2017, before even coming to Congress, she spoke out against the bipartisan rollback of safeguards established by the Dodd-Frank Act following the 2008 financial crisis. Rep. Porter wrote legislation in March to restore these critical protections for depositors, following the collapse of Silicon Valley Bank.
Read the full bill text HERE.