118 HR 2972 IH: Failed Bank Executives Clawback Act U.S. House of Representatives 2023-04-27 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I118th CONGRESS1st SessionH. R. 2972IN THE HOUSE OF REPRESENTATIVESApril 27, 2023Ms. Porter (for herself, Mrs. Spartz, Mr. Gallego, Mr. Buck, and Ms. Perez) introduced the following bill; which was referred to the Committee on Financial ServicesA BILLTo 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.

1.

Short title

This Act may be cited as the Failed Bank Executives Clawback Act.

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..

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..

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:

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.

.