Failed Bank Executives Clawback Act

118 S1045 IS: Failed Bank Executives Clawback Act U.S. Senate 2023-03-29 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain. II 118th CONGRESS 1st Session S. 1045 IN THE SENATE OF THE UNITED STATES March 29, 2023 Ms. Warren (for herself, Mr. Hawley , Ms. Cortez Masto , and Mr. Braun ) 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. 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) Definition In this paragraph, 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. (B) Clawback (i) Liability of institution-affiliated party An institution-affiliated party that is responsible for the condition of the insured depository institution is liable to the Corporation for any covered compensation clawed back under clause (ii). (ii) Required clawbacks In the case of insolvency or resolution of any insured depository institution, the Corporation shall claw back all or part of the covered compensation received by an institution-affiliated party during the preceding 5 years as is necessary to prevent unjust enrichment and assure that the party bears losses consistent with the responsibility of the party. (iii) Deposit Any covered compensation clawed back under this subparagraph shall be deposited into the Deposit Insurance Fund or into the general fund of the Treasury. . 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, . 4. Resolved insured depository institutions If an insured depository institution is resolved by the Federal Deposit Insurance Corporation, the creditors and shareholders of any corresponding depository institution holding company shall bear the losses of the insured depository institution.