Bank / Credit Union

Senate Banking Committee to examine bipartisan bill to confiscate failed bank's executive pay

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June 21, 2023

The Senate Banking Committee will consider a bill that would take banking executive's pay in the aftermath of a collapse like what happened to Silicon Valley Bank, Signature Bank and First Republic.

The bill, called Recovering Executive Compensation from Unaccountable Practices Act, would allow regulators to take back compensation, impose penalties for misconduct and order banks to improve corporate governance, according to a CNBC report.

The bill has bipartisan support from Sen. Sherrod Brown, Democrat from Ohio, and Tim Scott, a Republican from South Carolina.

The bill would allow regulators to ban executives from banking who fail to apply risk controls or commit other misconduct, and remove compensation up to two years prior to the bank's failure. It would also boost civil penalties for executives who break the law and define senior executives as the bank's senior leadership and key directors.

"It's time for CEOs to face consequences for their actions, just like everyone else," Brown told the news outlet.

The collapse of SVB was due to a variety of factors, such as its large amount of uninsured deposits from startups and technology companies, investment into U.S. government bonds, backed by mortgages. Customers began to withdraw their funds once news came out that SVB needed to raise $1.75 billion. This run also impacted Signature Bank and First Republic, which led to their collapses as well.

Despite the bank's seizure by the FDIC, some depositors based in Asia who lost their accounts, will still have to pay back their loans to SVB's new owner First Citizens Bank.