Warner Sponsors Legislation to Recoup Bank Executive Bonuses and Stock Sales in the Case of Bank Failure
Mar 22 2023
WASHINGTON – Following the collapse of Silicon Valley Bank, U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Banking Committee, has announced that he is co-sponsoring legislation to ensure executives of failed banks are held accountable for mismanagement.
In the wake of the Silicon Valley Bank (SVB) collapse, the FDIC has acted to ensure workers and small businesses won’t have to pay the price for the bank’s mismanagement. However, before the bank failed, CEO Greg Becker sold a reported $3.6 million in SVB stock, potentially profiting off the impending demise of the very bank he managed, while other SVB employees received bonuses just hours before the government stepped in to close the bank.
The Deliver Executive Profits on Seized Institutions to Taxpayers (DEPOSIT) Act would hold executives of failed banks like SVB accountable for the mismanagement of the funds they were trusted with by allowing the Treasury Department to claw back bonuses and stock profits – ensuring they are held financially responsible and the burden of their actions does not land on the shoulders of consumers or taxpayers.
“Bank executives, shareholders, and bondholders should not profit from mismanagement,” said Sen. Warner. “This new bill will help ensure that those responsible for bank failures like that of Silicon Valley Bank are held accountable.”
The DEPOSIT Act would:
- Recoup from bank executives the bonuses and profits from stock sales made within 60 days of a bank failing;
- Impose a 90% tax on the bonuses of bank executives who make an annual income over $250,000 during the year when a bank goes under FDIC acquisition;
- Require bank executives to forfeit 100% of profits they made from recent bank stock trades;
- Direct the recouped funds to the FDIC insurance fund so that it can be returned to depositors and used to pay workers and small businesses that were impacted.