Democratic Massachusetts Sen. Elizabeth Warren and Republican Ohio Sen. J.D. Vance are uniting to introduce legislation announced Thursday to reduce the risks of large bank failures.
The Failed Bank Executives Clawback Act would propose harsher penalties for failed bank executives, which serves as a bipartisan response to the collapse of Silicon Valley Bank (SVB) in early March, according to Warren’s office. The proposed legislation would require the Federal Deposit Insurance Corporation (FDIC) to recover some or all of executive payments from the three years prior to their bank’s failure, covering larger banks with more than $10 billion in assets.
“Nearly three months after the collapse of Silicon Valley Bank, a bipartisan group of Senators is demonstrating a serious commitment to pass legislation requiring financial regulators to claw back pay from executives when they implode their bank,” Warren said in a statement. “Congress must answer the President’s call for stronger laws to hold failed bank executives accountable, and I’m determined to work with lawmakers on both sides of the aisle in the Senate Banking, Housing, and Urban Affairs Committee to deliver change.”
Federal regulators shut down SVB on March 10 after its stock plummeted by 60% resulting following mass withdrawals.
Warren sought Vance’s support to strengthen the bill’s GOP leverage on the Senate Banking Committee, and the Massachusetts senator told Politico she asked Chairman of the Committee Democratic Ohio Sen. Sherrod Brown to schedule a vote, since the legislation already has several committee members signed on to it.
“The executives responsible for running their banks into the ground are sitting on millions of dollars in compensation and bonuses. Meanwhile, the American people are bearing the financial burden for their excessive risk taking and gross mismanagement,” Vance said in a statement. “This legislation would right that wrong and ensure that failed bank executives are held accountable for the collapse of their institutions – not the American taxpayer.”
Along with Vance, Republicans on the Senate Banking Committee backing the bill include Sens. Katie Britt of Alabama and Kevin Cramer of North Dakota, according to the press release. Warren’s Democratic committee colleagues that have signed onto the legislation include Sens. Cortez Masto of Nevada, Bob Menendez of New Jersey, Mark Warner of Virginia, Tina Smith of Minnesota, Raphael Warnock of Georgia, John Fetterman of Pennsylvania and Chris Van Hollen of Maryland.
“J.D. and I went back and forth on the details about how to do this,” Warren told Politico. “Lots of texting late at night and early in the morning and some weekend phone calls. But we got the pieces right. And once we did, we were able to talk with others — both Republicans and Democrats — to begin to build some momentum around it.”
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