WASHINGTON — The leaders of the Senate committee that oversees banking issues have introduced a bipartisan bill to hold accountable senior executives of failed banks after the collapse of Silicon Valley Bank and Signature Bank this year.
The bill would claw back these executives’ compensation, penalize them for their misconduct and direct banks to strengthen corporate governance standards, according to a press release from Chairman Sherrod Brown, D-Ohio, and Ranking Member Tim Scott, R-S.C.
Brown and Scott, who's running for the 2024 GOP presidential nomination, announced that their panel, the Senate Banking, Housing and Urban Affairs Committee, will hold a markup on June 21 on the legislation, called the Recovering Executive Compensation Obtained from Unaccountable Practices Act, or RECOUP Act.
“Americans have watched executives take their money, run banks into the ground, and get away with it too many times before. It’s time for CEOs to face consequences for their actions, just like everyone else,” Brown said in a statement.
Acknowledging that this will be the committee's first markup on legislation since 2019, Scott said in a statement that the move represents a return to "regular order," adding that he hopes they will hold markups in the future "on housing reform and capital formation."
In March, regulators shut down Silicon Valley Bank over concerns about its solvency. According to the FDIC, the collapse was the largest bank failure since 2008. It prompted a wider sell-off in stocks and sparked fears that other banks could be at risk of failure.
Soon after, Signature Bank also collapsed, becoming the third-largest bank failure in U.S. history, after its customers grew concerned about the collapse of Silicon Valley Bank and withdrew billions in deposits.
The new bipartisan legislation comes after the Senate committee held a hearing in May with executives of the two banks, who were pressed by senators about management failures that led to them being shut down.
