[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3885 Introduced in House (IH)]
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116th CONGRESS
1st Session
H. R. 3885
To amend the Bank Holding Company Act of 1956 to defer part of the
compensation of senior employees of large bank holding companies (and
their subsidiaries) for 10 years, to use such deferred amounts to pay
any civil or criminal fines that may be levied on the bank holding
company (or subsidiary), and for other purposes.
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IN THE HOUSE OF REPRESENTATIVES
July 23, 2019
Ms. Gabbard introduced the following bill; which was referred to the
Committee on Financial Services
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A BILL
To amend the Bank Holding Company Act of 1956 to defer part of the
compensation of senior employees of large bank holding companies (and
their subsidiaries) for 10 years, to use such deferred amounts to pay
any civil or criminal fines that may be levied on the bank holding
company (or subsidiary), and for other purposes.
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 ``Wall Street Banker Accountability
for Misconduct Act of 2019''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Senior employees of major bank holding companies
receive extraordinary pay packages, even when they oversee
massive frauds and financial misconduct.
(2) Widespread financial misconduct by individual Wall
Street bankers led to the 2008 financial crisis, which caused
the Great Recession. The Department of Justice brought
litigation against every major bank, resulting in more than
$163,000,000,000 in fines.
(3) This misconduct resulted from the actions of
individuals and was a direct result of a banking culture that
rewards bad behavior.
(4) Despite the actions of individuals, Wall Street banks
paid billions of dollars in fines out of monies that otherwise
were owned and could be paid in dividends to shareholders.
While culpable bankers continued to receive extraordinary pay,
innocent shareholders paid the price for banker misconduct.
(5) In the aftermath of the Great Recession, and after
further misconduct in the financial services industry, the
Federal Reserve Bank of New York has urged financial firms to
reevaluate and reform their compensation incentive structures
to align with shareholders and customers interests.
(6) Misaligned incentives within the banking industry
continue to fail to hold Wall Street executives and their
senior employees accountable for their actions.
SEC. 3. DEFERMENT OF SENIOR EMPLOYEE COMPENSATION.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by inserting after section 5 the following:
``SEC. 6. DEFERMENT OF SENIOR EMPLOYEE COMPENSATION.
``(a) Deferment Fund.--Each covered bank holding company and each
subsidiary of a covered bank holding company shall establish a
deferment fund, which shall--
``(1) only contain compensation deferred under subsection
(b); and
``(2) only be used as permitted by this section.
``(b) Deferment of Compensation.--Each covered bank holding company
and each subsidiary of a covered bank holding company shall--
``(1) each year, defer the compensation of each senior
employee of the bank holding company or subsidiary in an amount
equal to at least 50 percent of the amount that the employee's
total compensation for the year exceeds 10 times the
compensation of the median paid employee of the consolidated
bank holding company for the year;
``(2) place all compensation deferred under paragraph (1)
into the deferment fund of the bank holding company or
subsidiary; and
``(3) after the end of the 10-year period beginning on the
date the compensation was deferred, if sufficient funds remain
in the deferment fund, pay the senior employee the amount of
compensation deferred at the beginning of the 10-year period.
``(c) Use of Deferment Fund To Pay Fines.--If a covered bank
holding company or subsidiary of a covered bank holding company is
subject to a civil or criminal fine, the bank holding company or
subsidiary shall first pay such fine out of amounts contained in the
deferment fund of the bank holding company or subsidiary.
``(d) Cancellation of Compensation That Cannot Be Paid From
Deferment Fund.--Each covered bank holding company and each subsidiary
of a covered bank holding company shall have in place a policy that
cancels any compensation deferred under subsection (b) that cannot be
repaid as described under subsection (b)(3), due to the deferment fund
lacking sufficient funds.
``(e) Treatment of Deferred Compensation of Ex-Employees.--With
respect to an individual that has compensation deferred pursuant to
subsection (b), but is no longer employed by the applicable bank
holding company or subsidiary, if the bank holding company or
subsidiary is required to pay a fine from its deferment fund for
misconduct that occurred after the individual was no longer employed by
the bank holding company or subsidiary, the bank holding company or
subsidiary shall segregate the individual's deferred compensation from
other amounts in the deferment fund and shall not use such segregated
amounts for any purpose other than repaying the individual pursuant to
subsection (b)(3) or for the payment of another fine for misconduct
that occurred while the individual was still employed by the bank
holding company or subsidiary.
``(f) Rulemaking.--The Board may issue such rules as the Board
determines necessary to carry out this section.
``(g) Definitions.--In this section:
``(1) Compensation.--With respect to an employee, the term
`compensation' means any financial remuneration, including
salary, bonuses, incentives, benefits, severance, deferred
compensation, or golden parachute benefits, and any profits
that would be realized from the sale of the securities of the
company employing the employee.
``(2) Consolidated bank holding company.--With respect to a
bank holding company, the term `consolidated bank holding
company' means the bank holding company and all subsidiaries of
the bank holding company.
``(3) Covered bank holding company.--The term `covered bank
holding company' means a consolidated bank holding company with
more than $250,000,000,000 in consolidated assets.
``(4) Senior employee.--The term `senior employee' means an
employee of a covered bank holding company or a subsidiary of
the covered bank holding company who--
``(A) has total compensation of more than
$1,000,000;
``(B) is identified by the bank holding company as
one of the 100 most senior officers of the consolidated
bank holding company;
``(C) receives one of the 100 largest compensation
packages of the consolidated bank holding company;
``(D) receives compensation that is more than 10
times the compensation of the median paid employee of
the consolidated bank holding company; or
``(E) has the authority to commit or expose 0.5
percent or more of the capital of the consolidated bank
holding company.''.
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