The bill was approved just days after Banking Committee Chairman Sherrod Brown and ranking member Sen. Tim Scott reached an agreement on it, titled the Recovering Executive Compensation from Unaccountable Practices, or RECOUP, Act. The bill is similar to legislation that Sens. Elizabeth Warren and J.D. Vance had been collaborating on.
The legislation would empower regulators to claw back bank executives’ pay from the two years prior to their firm’s collapse. In the event of a failure, executives might also be forced to hand over their bonuses and profits from the sale of bank stock. “The recent bank failures didn’t happen in a vacuum – the banks’ executives failed to manage their risk, regulators failed to exercise their supervisory responsibilities, and the Biden administration failed to stop spending, which led to rising interest rates,” Scott said.
Warren’s bill would have clawed back compensation for three years rather than two and would reach further, applying not only to executives but directors and controlling shareholders.
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