The bill to claw back bank executives compensation if their bank collapsed, for example in the case of Silicon Valley Bank where numerous executives made millions, has advanced out of a Senate committee

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There seems to be momentum behind a bill in the Senate that aims to recover executive pay in the event of bank failures, particularly following the collapse of Silicon Valley Bank and its impact on the tech industry and financial institutions. The bipartisan proposal, known as the Recovering Executive Compensation Obtained from Unaccountable Practices Act of 2023 (RECOUP Act), was discussed during a Senate Banking Committee hearing, with Senators Sherrod Brown (D-Ohio) and Tim Scott (R-S.C.) as co-sponsors.Under the RECOUP Act, top bankers and bank directors could face fines of up to $3 million and have their compensation, including stock sales and bonuses, revoked by the Federal Deposit Insurance Commission, retroactively for up to two years prior to the bank's failure. During the hearing, Senator Scott criticized the actions of CEOs like Greg Becker of SVB, who left for Hawaii while the American people suffered the consequences of billions of dollars in losses, describing these bank executives as negligent in their responsibilities.This proposal reflects policymakers' ongoing efforts to prevent a potential banking crisis, particularly after a series of significant bank failures shook the finance industry. In March, Senators Elizabeth Warren (D-Massachusetts), Catherine Cortez-Masto (D-Nevada), Josh Hawley (R-Missouri), and Mike Braun (R-Indiana) introduced the Failed Bank Executive Clawback Act, a more stringent version of the RECOUP Act. This bill would require federal regulators to recover all or part of the compensation received by bank executives in the five years leading up to a bank's failure.