Sen. Warren (D-MA) has introduced a revised version of legislation to ensure that both the FDIC and other federal banking agencies can demand that executives and others governing failed banks refund direct and indirect compensation to the federal government. As with Sen. Warren’s prior bill to do so, this bill is bipartisan, now also containing compromise language on several points from the prior bill to increase the odds of enactment. For example, the bill would apply only to those at failed banks with assets over $10 billion, making it more difficult to claw back compensation at smaller banks regardless of the level of compensation or nature of the actions of covered persons….
Executive compensation incentives have proved among the most important reform priorities in the wake of recent bank failures. In addition to efforts to complete long-delayed regulations mandated by the Dodd-Frank Act, bipartisan Members are pressing different approaches to clawing back compensation from failed-bank executives who appear to have profited handsomely despite allowing or even encouraging untenable risks. One major, recent measure would not only grant the FDIC express clawback authority in the wake of non-systemic resolutions, but also expand clawbacks to a wide range of persons affiliated with the failed bank and to holding-company investors.