Senate committee taking up bank executive clawback bill tomorrow

The Senate Banking Committee tomorrow is scheduled to take up legislation that would expand existing regulatory authority to claw back compensation from the executives of certain failed banks.

Bill Details: The Recovering Executive Compensation Obtained from Unaccountable Practices (RECOUP) Act would permit FDIC clawbacks of compensation going back two years before failure, including bonuses and profits from the sale of bank stock. Introduced by committee Chairman Sherrod Brown (D-Ohio) and Ranking Member Tim Scott (R-S.C.), the bill would also increase penalties for executives of failed banks and impose new corporate governance and accountability standards.

Community Bank Exemption: ICBA has worked with the congressional offices to include in the bill an exemption for community banks under $10 billion in assets. ICBA continues working to increase the exemption threshold because, arguing the bill should address large banks with outlier business models, such as the failed Silicon Valley Bank and Signature Bank of New York.

Outlook: A large group of bipartisan senators have already endorsed stricter and more aggressive clawback bills than the compromise that Brown and Scott are now offering with the RECOUP Act. The bill is set to be taken up during a markup slated for 9:30 a.m. (Eastern time) tomorrow. ICBA will continue working to scale back the reach of the bill, and exempt community banks from the measure as it proceeds through the legislative process.