Gallego Introduces Legislation to Hold Failed Bank Executives Accountable

WASHINGTON, DC – Rep. Ruben Gallego (AZ-03) along with Reps. Katie Porter (CA-47), Ken Buck (CO-04), and Victoria Spartz (IN-05) today introduced the Failed Bank Executives Clawback Act, bipartisan legislation to make it easier for the Federal Deposit Insurance Corporation (FDIC) to claw back bank executives’ compensation in the event of a bank collapse. Companion legislation has been introduced in the Senate by Sens. Elizabeth Warren (D-MA), Catherine Cortez Masto (D-NV), Josh Hawley (R-MO), and Mike Braun (R-IN).

“Hardworking Arizonans and small businesses were the ones who paid the price when Silicon Valley Bank failed. All the while, SVB’s executives ran off into the sunset fat with cash from bonuses they paid themselves. That’s not how our system should work, and we should claw back those types of pay-outs. But SVB’s failure was years in the making—we need these bank executives to have skin in the game. I am proud to lead this bipartisan legislation to hold bank executives accountable when their mismanagement and incompetence hurts the American people,” said Rep. Gallego. 

The Failed Bank Executives Clawback Act would require the FDIC to claw back all or part of the compensation received by bank executives in the five-year period preceding a bank failure. Because bank failures like SVB can occur because of poor decisions and mismanagement over a few years preceding the failure, the bill increases the accountability and scrutiny placed on its leadership. Bank executives would know that the poor decisions they are making affects them personally instead of just their customers and the American people.  

“Bank executives shouldn’t be rewarded when they oversee bank failures, and they shouldn’t be incentivized to put Americans’ money at heightened risk for bigger payouts,” said Rep. Porter. “Democrats and Republicans agree: when leaders at big banks engage in reckless risk-taking, they should be held accountable.” 

This legislation builds on Rep. Gallego’s leadership in holding SVB accountable for its mismanagement. He previously introduced the Secure Valuable Banking Act which would restore portions of the Dodd-Frank financial regulations rolled back in 2018 under then-President Trump and which helped cause the collapse of SVB.