A bipartisan bill seeks to require the Federal Deposit Insurance Corporation (FDIC) to claw back five years’ worth of compensation from executives who lead failed banks.

The Failed Bank Executives Clawback Act, introduced Wednesday by Sens. Elizabeth Warren (D-Mass.), Josh Hawley (R-Mo.), Catherine Cortez Masto (D-Nev.), and Mike Braun (R-Ind.), also proposed to extend clawback authorities established by the Dodd-Frank Act to apply to any bank that enters into FDIC receivership—not just banks that are liquidated.

Should a bank fail, investors in the bank’s holding company should bear the losses, the bill said.

The recent failures and liquidations of Silicon Valley Bank (SVB) and Signature Bank cost the FDIC an estimated $22.5 billion—costs that will be borne in the form of new fees on existing banks. The FDIC will set those assessment fees on banks later this year.

“Americans are sick and tired of fat-cat bankers paying themselves handsomely while risking other people’s hard-earned money,” said Warren in a press release. “It’s time for Congress to step up and strengthen the law so bank executives bear the cost of failure, not line their pockets and walk away scot-free.”

On March 17, President Joe Biden called on Congress to expand the FDIC’s ability to claw back compensation from bank executives who oversee banks that fail.

“Specifically, when banks fail because of mismanagement and excessive risk taking, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again,” the White House stated in a fact sheet.

Hawley added, “This legislation puts the executives’ own profits on the line, and that’s exactly as it should be.”

SVB Chief Executive Greg Becker received $9.9 million in compensation in 2022, including a $1.5 million bonus, while other bank executives received nearly $17 million, according to a fact sheet accompanying the bill. SVB executives reportedly sold $84 million in stock over the past two years, with Becker selling nearly $4 million in stock days before the bank’s collapse, the fact sheet said.

The CEO of Signature Bank received $8.7 million in total compensation in 2022, the fact sheet said.

Aaron Nicodemus covers regulatory policy and compliance trends for Compliance Week. He previously worked as a reporter for Bloomberg Law and as business editor at the Telegram & Gazette in Worcester, Mass.

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