Failed Bank Executives Clawback Act
This bill requires the Federal Deposit Insurance Corporation (FDIC) to claw back compensation paid to certain responsible parties when an insured depository institution or financial company is placed into FDIC receivership.
Specifically, all or part of the compensation paid the previous five years to an institution-affiliated party substantially responsible for the condition of the institution must be paid to FDIC to prevent unjust enrichment and to assure that the party bears losses consistent with their responsibility. Compensation includes salary, bonuses, awards, and profits from buying or selling securities.
Finally, the bill establishes that an insured depository institution's holding company is liable to the FDIC for payments to insured depositors, the FDIC's receiver costs, and interest when the institution is under FDIC receivership.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2972 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 2972
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 27, 2023
Ms. Porter (for herself, Mrs. Spartz, Mr. Gallego, Mr. Buck, and Ms.
Perez) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Failed Bank Executives Clawback
Act''.
SEC. 2. CLAW BACK.
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
substantially 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.''.
SEC. 3. ORDERLY LIQUIDATION OF COVERED FINANCIAL COMPANIES.
Section 204 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (12 U.S.C. 5384) is amended by adding at the end the
following:
``(e) Clawback.--
``(1) Definition.--In this subsection, the term `covered
compensation' means--
``(A) salary;
``(B) bonuses;
``(C) 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;
``(D) equity-based compensation;
``(E) time- or service-based awards;
``(F) awards based on nonfinancial metrics; and
``(G) any profits realized from the buying or
selling of securities.
``(2) Clawback.--
``(A) Liability of institution-affiliated party.--
An institution-affiliated party that is substantially
responsible for the condition of a covered financial
company is liable to the Corporation for any covered
compensation clawed back under subparagraph (B).
``(B) Required clawbacks.--In the case of
insolvency or resolution of any covered financial
company, 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.
``(C) 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.''.
SEC. 4. LIABILITY TO THE FEDERAL DEPOSIT INSURANCE CORPORATION.
The Bank Holding Company Act (12 U.S.C. 1841 et seq.) is amended by
adding at the end the following:
``SEC. 15. LIABILITY TO THE FEDERAL DEPOSIT INSURANCE CORPORATION.
``(a) In General.--Any bank holding company that has control over
an insured depository institution for which the Corporation is
appointed and acts as receiver under section 11 of the Federal Deposit
Insurance Corporation Act shall be liable to the Corporation for--
``(1) any payments from the Deposit Insurance Fund
established under section 11 of the Federal Deposit Insurance
Act to insured depositors of such insured depository
institution;
``(2) any costs incurred by the Corporation as receiver of
such insured depository institution; and
``(3) any interest on the amounts described in paragraphs
(1) and (2).
``(b) Lien Against All Assets.--
``(1) In general.--Any liability of a bank holding company
to the Corporation under subsection (a) shall be secured by a
lien on all assets of such bank holding company.
``(2) Specifications.--Any lien arising under this
subsection--
``(A) shall be deemed to be automatically
perfected;
``(B) shall have priority over all other liens,
irrespective of their date of creation or perfection;
and
``(C) may not be avoided in a proceeding under
title 11, United States Code.
``(c) Priority of Liability.--
``(1) In general.--Any liability of a bank holding company
to the Corporation under subsection (a) shall have payment
priority over all other liabilities of and interests in the
bank holding company.
``(2) Clarifying rule.--No payment shall be made to any
other creditor or shareholder of the bank holding company until
the liability to the Corporation under this section has been
paid in full.
``(d) Definitions.--In this section:
``(1) Insured depository institution.--The term `insured
depository institution' has the meaning given the term in
section 3 of the Federal Deposit Insurance Act.
``(2) Corporation.--The term `Corporation' means the
Federal Deposit Insurance Corporation.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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