Failed Bank Executives Must Return Pay: New Accountability Rules.
This bill increases accountability for executives of failed banks. It grants federal regulators the power to claw back salaries, bonuses, and stock profits paid to responsible managers up to five years before the institution's failure. The goal is to prevent unjust enrichment, ensure responsible parties bear losses, and protect the Deposit Insurance Fund used to safeguard citizens' deposits.
Key points
Bank regulators gain explicit authority to recover all forms of compensation, including salary and bonuses, from executives of failed banks.
The clawback applies to compensation received within the 5 years preceding the bank's failure, provided the executive was responsible for the institution's condition.
Shareholders and creditors of the bank's holding company must bear the losses when an insured bank fails, reinforcing financial responsibility.
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