[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4208 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 4208

 To provide Federal financial regulators with clawback authority over 
 executive compensation and additional industry prohibition and civil 
  money penalty authority with respect to executives whose negligence 
caused financial loss to the applicable financial institution, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 20, 2023

Ms. Waters (for herself, Ms. Velazquez, Mr. Sherman, Mr. David Scott of 
Georgia, Mr. Cleaver, Mrs. Beatty, Mr. Vargas, Mr. Horsford, Ms. Tlaib, 
 Ms. Garcia of Texas, and Mr. Green of Texas) introduced the following 
    bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To provide Federal financial regulators with clawback authority over 
 executive compensation and additional industry prohibition and civil 
  money penalty authority with respect to executives whose negligence 
caused financial loss to the applicable financial institution, 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 ``Failed Bank Executives 
Accountability and Consequences Act''.

SEC. 2. SENSE OF CONGRESS.

    It is the sense of the Congress that--
            (1) financial regulators and law enforcement agencies 
        should fully exercise the maximum extent of their authorities 
        to investigate and use available enforcement tools to hold 
        executive officers and board members at Silicon Valley Bank, 
        Signature Bank, First Republic Bank, and any other bank that 
        fails fully accountable for any misconduct in which they are 
        found to have engaged; and
            (2) the Board of Governors of the Federal Reserve System, 
        the Office of the Comptroller of the Currency, the Board of 
        Directors of the Federal Deposit Insurance Corporation, the 
        National Credit Union Administration Board, the Securities and 
        Exchange Commission, the Federal Housing Finance Agency should 
        jointly finalize the regulations or guidelines required under 
        section 956 of the ``Investor Protection and Securities Reform 
        Act of 2010'', and those regulations or guidelines should 
        include robust clawback requirements.

SEC. 3. CLAWBACK AUTHORITY.

    (a) In General.--Section 8 of the Federal Deposit Insurance Act (12 
U.S.C. 1818) is amended by adding at the end the following:
    ``(x) Recoupment of Compensation From Executive Officers and 
Directors.--
            ``(1) In general.--During any period in which the 
        Corporation is acting as conservator or receiver for an insured 
        depository institution, the Corporation may recover, from any 
        current or former executive officer or director of such insured 
        depository institution whose negligence caused financial loss 
        to such insured depository institution, any compensation 
        received during the 2-year period preceding the date on which 
        the Corporation was appointed as the conservator or receiver of 
        the insured depository institution, except that, in the case of 
        fraud, no time limit shall apply.
            ``(2) Rulemaking.--The Corporation shall promulgate 
        regulations to implement the requirements of this subsection, 
        including defining the term `compensation' to mean any 
        financial remuneration, including salary, bonuses, incentives, 
        benefits, severance, deferred compensation, or golden parachute 
        benefits, and any profits realized from the sale of the 
        securities of the insured depository institution (or the 
        securities of an affiliate of the insured depository 
        institution).''.
    (b) Clawback Authority Relating to Orderly Liquidation Authority.--
Section 210(s)(1) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act is amended as follows:
            ``(1) In general.--The Corporation, as receiver of a 
        covered financial company, may recover from any current or 
        former executive officer or director whose negligence caused 
        financial loss to the covered financial company any 
        compensation received during the 2-year period preceding the 
        date on which the Corporation was appointed as the receiver of 
        the covered financial company, except that, in the case of 
        fraud, no time limit shall apply.''.

SEC. 4. REMOVAL AND PROHIBITION AUTHORITY IN THE CASE OF INSTITUTION 
              FAILURE.

    (a) In General.--Section 8(e) of the Federal Deposit Insurance Act 
(12 U.S.C. 1818(e)) is amended---
            (1) by redesignating paragraphs (3), (4), (5), (6), and (7) 
        as paragraphs (4), (5), (6), (7), and (8), respectively; and
            (2) by inserting after paragraph (2) the following:
            ``(3) Suspension, removal, and prohibition from 
        participation orders in the case of institution failure.--
        Whenever the appropriate Federal banking agency determines that 
        an institution-affiliated party has negligently caused 
        financial loss to any insured depository institution that has 
        failed, the appropriate Federal banking agency for the 
        depository institution may serve upon such party a written 
        notice of the agency's intention to prohibit any further 
        participation by such party, in any manner, in the conduct of 
        the affairs of any insured depository institution.''.
    (b) Conforming Amendment.--The Federal Deposit Insurance Act (12 
U.S.C. 1811 et seq.) is amended--
            (1) in section 8--
                    (A) in subsection (e)--
                            (i) in paragraph (3), by striking ``under 
                        paragraph (1) or (2)'' each place it occurs and 
                        inserting ``under paragraphs (1), (2), or 
                        (3)''; and
                            (ii) in paragraph (7), as so redesignated, 
                        by striking ``paragraph (7)(A)'' and inserting 
                        ``paragraph (8)(A)'';
                    (B) in subsection (f), by striking ``subsection 
                (e)(3)'' and inserting ``subsection (e)(4)'';
                    (C) in subsection (g)(1)(D)(ii), by striking 
                ``paragraph (1), (2), or (3) of subsection (e)'' and 
                inserting ``paragraph (1), (2), or (4) of subsection 
                (e)''; and
                    (D) in subsection (j), by striking ``subsection 
                (e)(6)'' and inserting ``subsection (e)(7)''; and
            (2) in section 10(k)(6)--
                    (A) in subparagraph (A)(i), by striking ``section 
                8(e)(4) for written notices or orders under paragraph 
                (1) or (2) of section 8(e)'' and inserting ``section 
                8(e)(5) for written notices or orders under paragraph 
                (1), (2), or (3) of section 8(e)''; and
                    (B) in subparagraph (B), by striking ``paragraphs 
                (6) and (7) of section 8(e)'' and inserting 
                ``paragraphs (7) and (8) of section 8(e)''.

SEC. 5. FINES FOR FAILED BANK EXECUTIVES.

    (a) In General.--Section 8(i)(2) of the Federal Deposit Insurance 
Act (12 U.S.C. 1818(i)(2)) is amended by--
            (1) redesignating subparagraphs (D), (E), (F), (G), (H), 
        (I), (J), and (K) as paragraphs (E), (F), (G), (H), (I), (J), 
        (K), and (L), respectively; and:
            (2) by inserting after subparagraph (C), the following:
                    ``(D) Fines for contributing to institution 
                failure.--
                            ``(i) First tier.--Notwithstanding 
                        subparagraphs (A), (B), and (C), any executive 
                        officer or director who has negligently caused 
                        financial loss to any insured depository 
                        institution that has failed shall forfeit and 
                        pay a civil penalty of not more than $25,000 
                        for each day during which such conduct 
                        occurred.
                            ``(ii) Second tier.--Notwithstanding 
                        subparagraphs (A), (B), and (C), any executive 
                        officer or director who knowingly or recklessly 
                        caused financial loss to any insured depository 
                        institution that has failed shall forfeit and 
                        pay a civil penalty in an amount not to exceed 
                        the applicable maximum amount determined under 
                        subparagraph (E) for each day during which such 
                        conduct occurred.''.
    (b) Conforming Amendments.--Section 8(i)(2) of the Federal Deposit 
Insurance Act (12 U.S.C. 1818(i)(2)), as amended by subsection (a) is 
further amended--
            (1) in subparagraph (E), by striking ``to subparagraph 
        (C)'' and inserting ``to subparagraph (C) or (D)'';
            (2) in subparagraph (F)--
                    (A) by striking ``under subparagraph (A), (B), or 
                (C)'' and inserting ``under subparagraph (A), (B), (C), 
                or (D)''; and
                    (B) by striking ``subparagraph (H)'' and inserting 
                ``subparagraph (I)'';
            (3) in subparagraph (G), by striking ``under subparagraph 
        (A), (B), or (C)'' and inserting ``under subparagraph (A), (B), 
        (C), or (D)''; and
            (4) in subparagraph (H), by striking ``under subparagraph 
        (A), (B), or (C)'' and inserting ``under subparagraph (A), (B), 
        (C), or (D)''.

SEC. 6. RULE OF CONSTRUCTION.

    This Act and the amendments made by this Act may not be construed 
to limit the enforcement authorities that financial regulators and law 
enforcement agencies had, prior to the date of enactment of this Act, 
to hold executive officers and board members of insured depository 
institutions and covered financial companies accountable for any 
misconduct in which they are found to have engaged.
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