Elizabeth Warren and Josh Hawley just teamed up on a bill that would let the government 'clawback lavish pay and bonuses when executives explode their bank'
Sens. Elizabeth Warren and Josh Hawley are teaming up to put the heat on executives of failed banks.
They're introducing legislation that would clawback the pay of those executives.
Warren said that Americans are tired of bankers paying themselves well and walking away scot-free.
Two unlikely Senate allies want to turn up the heat for executives who lead their banks to ruin, as politicians grapple with the fallout from the Silicon Valley Bank collapse.
On Wednesday, Democratic Sen. Elizabeth Warren and Republican Sen. Josh Hawley, along with Sens. Mike Braun and Catherine Cortez Masto, introduced a bill called "Failed Bank Executives Clawback Act," which would require that federal regulators "claw back" compensation of executives from the five-year period before their bank fails.
SVB CEO Greg Becker's compensation reached almost $10 million last year, per CBS News. Part of that compensation was a $1.5 million cash bonus.
At this point, the Federal Deposit Insurance Corporation (FDIC) has a limited ability to recoup executives' compensation following a bank failure, and the lawmakers' bill would "extend claw back authorities" under the law to apply to any bank under FDIC's receivership, according to the bill's fact sheet.
"The President called on Congress to pass a new law to hold failed bank CEOs accountable and give the financial cops on the beat additional authority to clawback lavish pay and bonuses when executives explode their bank – and this bipartisan bill answers that imperative," Warren said in a statement.
"Americans are sick and tired of fat cat bankers paying themselves handsomely while risking other people's hard earned money," she continued. "It's time for Congress to step up and strengthen the law so bank executives bear the cost of failure, not line their pockets and walk away scot-free."
In the days and weeks following Silicon Valley Bank's collapse, lawmakers on both sides of the aisle — and President Joe Biden — have scrutinized the circumstances that led to the bank's failure. Last week, as Warren mentioned, Biden called on Congress to enact legislation that would crackdown on executives to prevent something like this from happening again.
"The law limits the administration's authority to hold executives responsible," Biden said in a statement. "When banks fail due to mismanagement and excessive risk taking, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again."
Lawmakers have also been critical of federal regulators' oversight of the banks leading up to the collapse. The Federal Reserve, Justice Department, and Securities and Exchange Commission are conducting internal investigations to determine the cause of the failure, and the Fed's Vice Chair for Supervision Michael Barr testified in Congress this week on the bank's collapse, fielding questions from lawmakers on bank regulation leading up to the SVB debacle.
Some politicians, including Warren, have pushed for greater regulatory oversight. Warren joined forces with Republican Rick Scott to introduce legislation that would require a presidentially-appointed and Senate-confirmed inspector general to sit on the Fed's Board of Governors. Warren has also pushed to roll back 2018 tweaks to the Dodd-Frank Act, which raised the threshold of holdings that require banks to have greater oversight.
"Here's the way I see it: banking should be boring," Warren tweeted. "Anyone who wants to take on a lot of risk to make a lot of money should not be in banking."
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