[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4200 Introduced in House (IH)]

<DOC>






118th CONGRESS
  1st Session
                                H. R. 4200

    To defer part of the compensation of senior employees of large 
 financial institutions (and their subsidiaries), to use such deferred 
 amounts to pay any civil or criminal fines that may be levied on the 
          institution (or subsidiary), and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 16, 2023

  Ms. Tlaib introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
    To defer part of the compensation of senior employees of large 
 financial institutions (and their subsidiaries), to use such deferred 
 amounts to pay any civil or criminal fines that may be levied on the 
          institution (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 ``Fostering Accountability In 
Remuneration Fund Act of 2023'' or the ``FAIR Fund Act of 2023''.

SEC. 2. FINDINGS.

     Congress finds the following:
            (1) Going back at least to the Wall Street crash of 1929, 
        improper pay structures have contributed to financial crises in 
        the United States.
            (2) Widespread financial misconduct led to the 2008 
        financial crisis, which caused the Great Recession. 
        Compensation structures incentivized executives and employees 
        to pursue short-term profits without regard for long-term risks 
        to their firms or the broader financial system. While culpable 
        employees and executives continued to receive extraordinary 
        pay, homeowners, workers, and communities paid the price for 
        their greed and recklessness.
            (3) As seen in the 2023 banking failures, misaligned 
        incentives within the financial sector continue to fail to hold 
        executives and their senior employees accountable for their 
        actions. Silicon Valley Bank CEO Greg Becker enjoyed millions 
        of dollars in incentive-based bonuses, while his bank 
        mismanaged risks and failed to respond to regulator's warnings. 
        In the hours before the failure of Silicon Valley Bank, 
        managers paid themselves millions of dollars for what they 
        deemed to be superior performance.
            (4) Employees in the financial sector continue to walk away 
        with generous bonuses while their firms break the law and 
        undermine the stability of the financial system. Compensation 
        incentives that promote inappropriate risk-taking are a threat 
        to economic security.

SEC. 3. DEFERMENT OF SENIOR EMPLOYEE COMPENSATION.

    (a) Deferment Fund.--Each covered financial institution and each 
subsidiary of a covered financial institution 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 financial institution 
and each subsidiary of a covered financial institution shall--
            (1) each year, defer the compensation of each senior 
        employee of the covered financial institution or subsidiary in 
        an amount equal to at least 50 percent of the amount that the 
        employee's total compensation for the year exceeds 7 times the 
        compensation of the median paid employee of the consolidated 
        financial institution for the year;
            (2) place all compensation deferred under paragraph (1) 
        into the deferment fund of the covered financial institution or 
        subsidiary; and
            (3) after the end of the covered deferment period, if 
        sufficient funds remain in the deferment fund, pay the senior 
        employee the amount of compensation deferred and for which the 
        covered deferment period ended.
    (c) Use of Deferment Fund.--
            (1) Use of fund to pay fines.--If a covered financial 
        institution or subsidiary of a covered financial institution is 
        subject to a civil or criminal fine, the covered financial 
        institution or subsidiary shall first pay such fine out of 
        amounts contained in the deferment fund of the covered 
        financial institution or subsidiary.
            (2) Use of funds to make depositors whole.--If a covered 
        financial institution is a depository institution or a credit 
        union and the depository institution or credit union fails, the 
        depository institution or credit union shall use amounts in the 
        deferment fund of the depository institution or credit union to 
        ensure depositors do not lose any of their deposits. All 
        amounts in the deferment fund shall be used before any amounts 
        are paid from the Deposit Insurance Fund or the National Credit 
        Union Share Insurance Fund, as applicable, for such purpose.
    (d) Cancellation of Compensation That Cannot Be Paid From Deferment 
Fund.--Each covered financial institution or subsidiary 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 covered 
financial institution or subsidiary, if the covered financial 
institution 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 covered financial institution or subsidiary, the 
covered financial institution 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 covered financial institution or 
subsidiary.
    (f) Rulemaking.--The Board of Governors of the Federal Reserve 
System, the Comptroller of the Currency, the Federal Deposit Insurance 
Corporation, the Federal Housing Finance Agency, the National Credit 
Union Administration, and the Securities and Exchange Commission may 
each issue such rules as may be necessary to carry out this section 
with respect to covered financial institutions and subsidiaries subject 
to supervision by the agency.
    (g) Definitions.--In this section:
            (1) Appropriate federal regulator.--The term ``appropriate 
        Federal regulator'' means--
                    (A) the appropriate Federal banking agency, as 
                defined under section 3 of the Federal Deposit 
                Insurance Act;
                    (B) the Federal Housing Finance Agency, in the case 
                of the Federal National Mortgage Association or the 
                Federal Home Loan Mortgage Corporation;
                    (C) the National Credit Union Administration, in 
                the case of a credit union described under paragraph 
                (6)(C); and
                    (D) the Securities and Exchange Commission, in the 
                case of a person described under subparagraph (B) or 
                (D) of paragraph 6).
            (2) 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.
            (3) Consolidated financial institution.--With respect to a 
        financial institution, the term ``consolidated financial 
        institution'' means the financial institution and all 
        subsidiaries of the financial institution.
            (4) Covered deferment period.--The term ``covered deferment 
        period'' means--
                    (A) with respect to a covered financial institution 
                with less than $10,000,000,000 in consolidated assets, 
                a number of years, to be determined by the appropriate 
                Federal regulator if determined necessary by such 
                appropriate Federal regulator, beginning on the date 
                the compensation is deferred;
                    (B) with respect to a covered financial institution 
                with $10,000,000,000 or more, but less than 
                $50,000,000,000, in consolidated assets, 2 years 
                beginning on the date the compensation is deferred;
                    (C) with respect to a covered financial institution 
                with $50,000,000,000 or more, but less than 
                $250,000,000,000, in consolidated assets, 6 years 
                beginning on the date the compensation is deferred; and
                    (D) with respect to a covered financial institution 
                with $250,000,000,000 or more in consolidated assets, 8 
                years beginning on the date the compensation is 
                deferred.
            (5) Covered financial institution.--The term ``covered 
        financial institution'' means a financial institution with more 
        than $1,000,000,000 in consolidated assets.
            (6) Financial institution.--The term ``financial 
        institution'' means--
                    (A) a depository institution or depository 
                institution holding company, as such terms are defined, 
                respectively, in section 3 of the Federal Deposit 
                Insurance Act (12 U.S.C. 1813);
                    (B) a broker or a dealer registered under section 
                15 of the Securities Exchange Act of 1934 (15 U.S.C. 
                78o);
                    (C) a credit union, as described in section 
                19(b)(1)(A)(iv) of the Federal Reserve Act;
                    (D) an investment adviser, as defined in section 
                202(a) of the Investment Advisers Act of 1940 (15 
                U.S.C. 80b-2(a));
                    (E) the Federal National Mortgage Association; and
                    (F) the Federal Home Loan Mortgage Corporation.
            (7) Senior employee.--The term ``senior employee'' means an 
        employee of a covered financial institution or a subsidiary of 
        the covered financial institution who--
                    (A) is a senior executive officer;
                    (B) has total annual compensation of more than 
                $1,000,000;
                    (C) with respect to a covered financial institution 
                with $50,000,000,000 or more, but less than 
                $250,000,000,000, in consolidated assets--
                            (i) is in the top 2 percent of the most 
                        highly compensated employees in the 
                        consolidated financial institution; or
                            (ii) has the authority to commit or expose 
                        0.5 percent or more of the capital of the 
                        consolidated financial institution; or
                    (D) with respect to a covered financial institution 
                with $250,000,000,000 or more in consolidated assets--
                            (i) is in the top 5 percent of the most 
                        highly compensated employees in the 
                        consolidated financial institution; or
                            (ii) has the authority to commit or expose 
                        0.5 percent or more of the capital of the 
                        consolidated financial institution.
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