A bipartisan bill to claw back some of bank executives' compensation if their firms collapse advanced out of a Senate committee on Wednesday.
The legislation would allow the Federal Deposit Insurance Corp. to recoup bonuses that senior executives received before a bank failure. It would also increase certain penalties for them.
The congressional effort follows a public outcry sparked by executives at Silicon Valley Bank, Signature Bank and First Republic Bank receiving generous bonuses even as their lenders cratered. SVB and Signature collapsed in March after fast and furious deposit withdrawals. First Republic went under in May.
"Bank executives who take on too much risk and crash their banks shouldn't get to land on their feet, they shouldn't get to keep the profits they made by making bad bets with other people's money, and they shouldn't get to take their bad behavior to another bank," Sherrod Brown, an Ohio Democrat who chairs the Senate Banking Committee, said in prepared remarks.
The bill, introduced by Brown and Tim Scott, the panel's senior Republican, still needs the approval of the full Senate and House of Representatives.
