Us Congress Senate Bill SB2190

Us Congress 2023-2024 Regular Session

• Introduced: 6/22/23

Caption

RECOUP Act of 2023 Recovering Executive Compensation Obtained from Unaccountable Practices Act of 2023

Impact

If enacted, the RECOUP Act would significantly modify regulatory frameworks governing financial institutions, particularly those with total consolidated assets over $10 billion. It mandates that each institution adopt governance and accountability standards conducive to effective risk management and timely responses to regulatory matters. Furthermore, the bill introduces civil penalties for executive mismanagement and broadens the definition of misconduct to encompass gross negligence or willful misconduct, seeking to deter disregard for the safety and soundness of financial institutions.

Summary

SB2190, also known as the RECOUP Act of 2023, aims to amend the Federal Deposit Insurance Act to enhance accountability for senior executives within depository institutions. This bill targets the prevention of misconduct by instituting stricter governance and accountability standards, thereby improving financial stability. The proposed amendments include provisions that empower regulators to remand compensation from executives found guilty of negligence or failure in adherence to their fiduciary responsibilities, particularly in regards to risk and financial management.

Contention

Key points of contention surrounding SB2190 include concerns over the potential for excessive regulatory burdens on banks which could stifle innovation and competitiveness. Critics argue that if punitive measures are applied excessively, such as clawback provisions on executive compensation, it could hinder the ability of banks to attract and retain talented executives. Supporters, however, advocate that the enactment of such measures is essential for creating a more stable banking environment, ultimately protecting the interests of stakeholders and customers from the fallout of corporate irresponsibility.