By WASHINGTON — The Senate Banking Committee on Wednesday voted to send to the full Senate a bill that aims to hold banking executives accountable after the collapse of several big banks.
The Recovering Executive Compensation from Unaccountable Practices Act, known as the RECOUP Act, would give regulators power to claw back compensation for executives of failed banks, institute penalties for misconduct and direct banks to beef up corporate governance, according to the committee.
Members voted 21-2 to pass the measure out of committee. Sens. Thom Tillis, R-N.C., and Bill Hagerty, R-Tenn., voted no.
Sens. Sherrod Brown, D-Ohio, chairman of the committee, and ranking member Tim Scott, R-S.C., announced an agreement on the legislation last week. Brown is up for reelection next year, and Scott is running for the 2024 Republican presidential nomination.
The bill aims to:
Scott said the bill is a “commonsense solution to address executive accountability.”
Brown said, “It’s time for CEOs to face consequences for their actions, just like everyone else.”
But Tillis said the bill is “too expansive” and might stifle innovation for senior executives.
“You’re going to provide reasons for people to pursue a position other than the C-suite that may have good ideas that just fail. That’s not malpractice. That’s just a management decision that didn’t bear out,” Tillis said during the markup.
Hagerty said the bill “will have the perverse effect of making the biggest banks even bigger” at the expense of smaller banks.
“Second, it lets the government regulators and bureaucrats — whose supervisory failures led to SVB’s collapse — off scot-free. In fact, it empowers government agencies even more,” he said in a statement released Wednesday.
The RECOUP Act is one of several bills introduced in recent months targeting regulatory and management lapses that led to failures like those of Silicon Valley Bank and Signature Bank earlier this year.
Sen. Elizabeth Warren, D-Mass., a member of the Senate Banking Committee, spearheaded a bipartisan clawback bill with Democratic Sen. Catherine Cortez Masto, of Nevada, and Republican Sens. Josh Hawley, of Missouri, and Mike Braun, of Indiana.
Released in March, the bill calls for clawbacks of all or part of the compensation received by bank executives during the five years preceding a bank failure, compared with two years of clawbacks under the RECOUP Act.
