If enacted, the bill will allow the FDIC to claw back compensation from executives of insured depository institutions that contributed to their banks' failure through mismanagement or poor decision-making, particularly in scenarios of insolvency. This includes a provision that mandates the recovery of such compensation up to five years before a bank's failure, aiming to prevent unjust enrichment of executives who are deemed responsible for their banks' failure. By shifting the financial burden back onto those who may have contributed to corporate failings, the bill may ultimately enhance the accountability of bank management.
Summary
House Bill 2972, the 'Failed Bank Executives Clawback Act', seeks to amend the Federal Deposit Insurance Act to provide clearer authority for the Federal Deposit Insurance Corporation (FDIC) and other federal regulators to recover certain compensation from bank executives. This bill is prompted by concerns over the accountability of executives in the wake of bank failures, particularly regarding the compensation they receive during years where their institutions may experience significant financial distress. The act defines 'covered compensation' to include various forms of financial remuneration, including salary, bonuses, and equity-based awards, among others.
Contention
Debate around HB 2972 centers on issues of fairness and accountability in the banking sector. Supporters argue that the recovery of payouts to incompetent executives is not only just but necessary for rebuilding trust in financial institutions and protecting depositors. Critics, however, raise concerns that retroactive clawbacks could discourage talent from entering the banking sector or push executives to take undue risks to protect personal compensation. The law also outlines strict liability for bank-affiliated parties responsible for the conditions leading to the bank's insolvency; this could impose significant legal and financial risks on executives in a volatile market.
Relating to accountability of institutions of higher education, including educator preparation programs, and online institution resumes for public institutions of higher education.
Revises calculation of student financial need and provides circumstances for reduction of financial aid at institutions of higher education and proprietary institutions.
Revises calculation of student financial need and provides circumstances for reduction of financial aid at institutions of higher education and proprietary institutions.
Revises calculation of student financial need and provides circumstances for reduction of financial aid at institutions of higher education and proprietary institutions.