Senate panel advances bill to seize pay of failed banks’ execs

Senate panel advances bill to seize pay of failed banks’ execs

The Senate Banking Committee on Wednesday permitted a invoice to empower regulators to grab compensation from executives at failed banks, the primary main legislative response to the banking disaster that shook the monetary system this spring.

The proposal, a compromise between the banking panel’s leaders, Sens. Sherrod Brown (D-Ohio) and Tim Scott (R-S.C.), drew extensive bipartisan help, clearing the committee by a vote of 21-2. That margin suggests the invoice has momentum because it advances to the total Senate, although its timeline for motion there and its prospects within the Republican-controlled Home stay unclear.

The invoice would authorize the Federal Deposit Insurance coverage Corp. to strip bonuses and inventory sale proceeds paid to executives of failed banks from the 2 years earlier than their establishments’ collapses. It will additionally enable the banking regulator to impose penalties of as much as $3 million for reckless mismanagement.

An earlier invoice led by one other bipartisan duo on the banking panel, Sens. Elizabeth Warren (D-Mass.) and J.D. Vance (R-Ohio), would empower regulators to subject stiffer penalties towards executives. However Warren on Wednesday backed the Brown-Scott model and referred to as it an affordable compromise.

The Biden administration in March referred to as on Congress to beef up regulators’ means to carry financial institution executives personally accountable for the failures of their establishments, after the collapse of Silicon Valley Financial institution destabilized the banking sector and claimed two different lenders, Signature Financial institution and First Republic.

Federal investigators probing Silicon Valley Financial institution’s implosion reportedly are wanting into $3.6 million in inventory gross sales by chief government Greg Becker within the days earlier than its collapse.

Natalia Renta, senior coverage counsel on the liberal coalition Individuals for Monetary Reform, referred to as the invoice’s development “an necessary step the general public has been craving.”

“Although it’s a sea change that some Republicans are lastly becoming a member of forces with Democrats to advance monetary reform, this 12 months’s banking disaster reminds us that there’s a lot extra to do,” she mentioned in an e mail.

Banking business teams, in the meantime, for essentially the most half have remained publicly silent on the proposal.


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