Top executives from Signature and Silicon Valley banks would forfeit much of the compensation they received over the past two years under legislation U.S. Sen. Sherrod Brown introduced Thursday with the top Republican on the Senate Banking Committee he chairs.
Brown said the legislation he negotiated with South Carolina GOP Sen. Tim Scott combines the best aspects of other bills that his colleagues proposed to crack down on bank misbehavior after the March collapse of Signature and Silicon Valley banks. The pair excoriated the banks’ top executives last month at a banking committee hearing.
Their proposal would allow the bank’s board or the Federal Deposit Insurance Corporation to claw back executive compensation received in the 24 months prior to a bank’s failure as well as profits realized from selling the bank’s stock. It would exclude small community banks, and senior executives, or “white knights” that come to institutions in crisis.
It also would strengthen banking agencies’ ability to remove or prohibit employment of senior executives who mismanaged risk, require bank bylaws to include governance and accountability standards, and increase the maximum civil penalty that regulators can assess on bad actors from $1 million to $3 million.
