Big Sky Times

Senator’s Bill Would Recoup Two Years Compensation From Failed Bank Executives, Bar Them From Future Participation In The Financial Industry For At Least Two Years

As part of his continued efforts to hold executives accountable in the wake of recent bank failures, U.S. Senator Jon Tester is backing the bipartisan Bank Management Accountability Act – legislation that would empower federal regulators to claw back compensation from failed bank executives and ban responsible bank leadership from future participation in the financial industry for at least two years. 

“Bank executives cashing out on their own failures flies in the face of Montana common sense, and I’m willing to take on anyone to stop it from happening,” said Tester. “My bipartisan bill gives federal regulators the tools they need to claw back failed bank executives’ compensation and ban these bad actors from immediately reentering the financial industry. I’ll keep pushing to hold these executives accountable and get this commonsense legislation signed into law.”

Under Tester’s bipartisan bill, when the Department of Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) invoke the “systemic risk exception” to resolve a bank while protecting uninsured depositors or other creditors, federal regulators would have authority to: 

• Recoup some or all of the preceding two years of compensation from any senior executive and director of the bank (and its affiliates) that is responsible for causing substantial loss because of their bank’s failure; and
• Ban senior executives and directors of the bank (and its affiliates) from future participation in the financial industry for at least two years if they violated any rules, engaged in an unsound practice, or breached a fiduciary duty.

Tester has led the charge to ensure bank executives and federal regulators are held accountable for recent bank failures.

In March, Tester sent a letter to FDIC Chairman Martin J. Gruenberg and Federal Reserve Chairman Jerome H. Powell urging federal financial regulators to use every tool at their disposal to claw back reported bonuses received by bank executives

Tester has led a letter to the Securities and Exchange Commission (SEC) calling for an investigation into Bank executives’ stock sales ahead of the collapse, and has repeatedly pressed officials on their failure to “drop the hammer” on bank management. During a Senate Banking Committee hearing last month, Tester pressed former Silicon Valley Bank CEO Greg Becker on his failures, asking point blank, “What were you doing?”

Original source can be found here.