June 27, 2023

Here’s What They’re Saying: National Media, Unions, Fellow Senators Highlight Brown’s Bipartisan Legislation to Claw Back Executive Compensation for Failed Banks

WASHINGTON, D.C. – Last week, the Senate Banking, Housing, and Urban Affairs Committee, passed the Recovering Executive Compensation Obtained from Unaccountable Practices (RECOUP) Act out of the committee with overwhelming, bipartisan support. The bill, which was written by U.S. Senators Sherrod Brown (D-OH) and Tim Scott (R-SC) – the Committee’s Chair and Ranking Member, would protect American taxpayers and hold senior executives of failed banks accountable by clawing back their compensation, penalizing them for their misconduct, and directing banks to strengthen corporate governance standards.

Read what they’re saying about Brown’s bipartisan RECOUP Act:

Politico Morning Money: Sherrod Brown’s miracle

  • “Senate Banking Chair Sherrod Brown…just pulled off one of the biggest Capitol Hill stunners in recent memory.”
  • “Brown, in cooperation with GOP presidential candidate Sen. Tim Scott, rallied every one of his committee Democrats and all but two Republicans on Wednesday to support a bill that would ratchet up penalties for the executives of failed banks, increase Federal Reserve transparency and put new restrictions on acquisitions by megabanks. It’s Congress’s first big legislative response to the economic turmoil triggered by Silicon Valley Bank, Signature Bank and First Republic.”
  • “For longtime Brown-watchers, it’s another example of his underappreciated pragmatic streak.”

Washington Post Editorial Board: A bipartisan bill to seize CEO pay would discourage future banking crises

  • “The regional bank crisis that shocked the financial world this spring, which saw three of the largest bank failures in U.S. history, is still playing out, as consumers find it harder to get loans. Preventing a similar crisis should be top on Congress’s to-do list. So it is encouraging that lawmakers appear poised to adopt, in a bipartisan manner, a modest yet worthwhile measure to discourage future bank failures by making it easier for federal regulators to claw back pay from reckless executives.”
  • “Passing the Recoup Act would send a signal to bank leaders that recklessness will have consequences.”

Crain’s Cleveland Business: Crain's editorial: Claws out for bank execs

  • “Enough. That's the sentiment from Democrats and a lot of Republicans when it comes to the behavior and performance of the banking industry, and it led the powerful Senate Banking Committee to advance a bipartisan bill, introduced by Sen. Sherrod Brown, to claw back some of bank executives' compensation if their institutions collapse.”
  • “As Brown noted, ‘Americans will never forget that, by and large, the Wall Street executives who caused the 2008 financial crisis didn't face any consequences. Their profits and bonuses weren't clawed back.’ The time has come to get tougher on an industry that has, at times and in certain places, behaved irresponsibly. Clawing back bonuses and adding a bit more regulatory muscle should be a normal part of the tools available when dealing with failed companies — and trying to reduce the chance of more failures.”

Washington Post: Bill to seize failed bank CEOs’ pay draws bipartisan Senate support

  • “Among outside groups, the United Steelworkers support the Brown-Scott bill specifically, while Americans for Financial Reform supports a general need for action on bankers’ pay.”
  • “There is now bipartisan momentum to pass legislation to hold executives more accountable when Wall Street takes outsized risks that pay off for executives but not the rest of us,” Natalia Renta, senior policy counsel at Americans for Financial Reform, said in an email. “It is a welcome change that some Republicans are finally joining forces with Democrats to advance an important aspect of financial reform.”

Forbes: Senate Bill To Take Bonuses Back From Failed Bank Executives Clears First Hurdle

  • “The Recovering Executive Compensation from Unaccountable Practices Act, or RECOUP Act, would allow the FDIC to take back all or part of the compensation received by bank executives during the two years before a collapse and would strengthen regulators’ ability to ban or remove executives who fail to appropriately oversee and manage their bank.”
  • “BIG NUMBER: $20 billion. That’s how much Silicon Valley Bank’s failure is estimated to cost the FDIC’s Deposit Insurance Fund.”

Cleveland.com: Panel headed by U.S. Sen. Sherrod Brown approves bills to penalize failed bank execs and fight fentanyl

  • “It also would strengthen banking agencies’ ability to remove or prohibit employment of senior executives who mismanaged risk, require bank bylaws to include governance and accountability standards, and increase the maximum civil penalty that regulators can assess on bad actors from $1 million to $3 million.”
  • “Silicon Valley bank collapsed in March after investors rushed to withdraw cash following the bank’s announcement that it had sold securities at a loss and was selling $2.25 billion in new shares to compensate. Many of its tech investors had accounts with larger balances than are insured with FDIC. Signature bank folded after facing a similar run on deposits. An FDIC report on its failure blamed poor management. To stem repercussions from the failures, President Joe Biden’s economic team guaranteed deposits in both banks, and made it easier for banks to get access to emergency funding.”

Senator Jack Reed (D-RI) on Twitter:

  • “ . @SenSherrodBrown's strong oversight of the banking sector helps protect taxpayers & US economy. He is leading bipartisan charge to crack down on bank executives that mismanage their banks & contribute to failures that could hit the deposit insurance fund or imperil the economy.”

Senator Tina Smith (D-MN) on Twitter:

  • “When big banks are grossly mismanaged, working families suffer. Their executives need to be held accountable when that happens.
  • The RECOUP Act is a big *bipartisan* step forward in getting us there thanks to the work of @SenSherrodBrown and @SenatorTimScott.”

Liz Shuler, President of the AFL-CIO on Twitter:

  • “Thank you @SenSherrodBrown for demanding bank executives have compensation clawed back when a bank fails from excessive risk taking. Taxpayers and working people should not foot the bill for mismanagement.”

United Steelworkers on Twitter:

  • “Look at this! @SenSherrodBrown working in a bipartisan fashion to 1. Claw back bank executive compensation received in the 24 months prior to a bank’s failure 2. Increases penalties regulators may assess for egregious violations by senior bank executives”