After hearing about enforcement gaps at a Senate hearing, Cortez Masto is fighting to strengthen claw back authority and hold reckless bank executives accountable
Washington, D.C. – Today, U.S. Senators Catherine Cortez Masto (D-Nev.), Elizabeth Warren (D-Mass.), Mike Braun (R-Ind.) and Josh Hawley (R-Mo.) introduced the Failed Bank Executives Clawback Act. Yesterday, Cortez Masto pressed federal regulators to take action against the executives at Silicon Valley Bank, and this new bipartisan legislation would require them to claw back all or part of the compensation received by bank executives in the five-year period preceding the failure in the event of a bank failure.
“It’s unacceptable for the executives at Silicon Valley Bank or any major financial institution to pay themselves millions in bonuses while running their banks into the ground,” said Senator Cortez Masto. “This bipartisan legislation will make sure we are holding these individuals accountable for threatening the financial stability of businesses and families in Nevada and across the country.”
Currently, the Federal Deposit Insurance Corporation’s (FDIC) ability to claw back executive compensation in the event of a bank failure is limited. The Failed Bank Executives Clawback Act would give federal bank regulators the tools they need to hold executives of failed banks responsible for the costs those failures exact on the rest of the banking system and the economy, and require the FDIC to act to prevent the unjust enrichment of bank executives. Specifically, the legislation would:
- Require the FDIC to claw back from bank executives all or part of the compensation they have received over the five-year period preceding a bank’s insolvency or FDIC-resolution as is necessary to prevent unjust enrichment.
- Extend claw back authorities established by the Dodd-Frank Wall Street Reform and Consumer Protection Act to apply to any bank entered into FDIC receivership, not only those resolved under the FDIC’s Orderly Liquidation Authority.
- Ensure that, should an insured depository institution affiliated with a bank holding company fail, investors in that holding company should bear the losses of the insured depository institution.
As the former top law enforcement official in Nevada, Senator Cortez Masto has been a leading voice in the fight to protect consumers from fraud throughout her career. She sounded the alarm on increasing check fraud scams, which cost consumers more than $800 million last year. She also introduced legislation to protect American consumers who sue corporations for fraud and to protect and support whistleblowers reporting wrongdoing to the Consumer Financial Protection Bureau. Her bipartisan legislation to deter disruptive and potentially harmful phone calls and texts was signed into law in 2020.