Schiff, Blumenthal, and Levin Introduce the DEPOSIT Act to Recoup Bank Executive Bonuses and Stock Sales
Burbank, CA – Today, Congressman Adam Schiff (D—Calif.), Senator Richard Blumenthal (D—Conn.), and Congressman Mike Levin (D—Calif.) introduced the Deliver Executive Profits on Seized Institutions to Taxpayers Act in response to last week’s Silicon Valley Bank collapse – the second largest bank failure in American history.
The FDIC has taken action to ensure workers and small businesses are not left with nothing. But before the bank failed, CEO Greg Becker sold a reported $3.6 million in SVB stock, potentially profiting off the impending demise of the very bank he managed. And SVB employees received bonuses just hours before the government stepped in to close the bank.
This legislation would hold executives of failed banks that receive federal assistance like SVB accountable for the mismanagement of the funds they were trusted with by allowing the Treasury Department to claw back bonuses and stock profits – ensuring they are held financially responsible and the burden of their actions doesn’t land on the shoulders of consumers or taxpayers.
The DEPOSIT Act would:
• Recoup from bank executives the bonuses and profits from stock sales made within 60 days of a bank failing
• Impose a 90% tax on the bonuses of bank executives who make an annual income over $250,000 during the year when a bank goes under FDIC acquisition
• Require bank executives to forfeit 100% of profits they made from recent bank stock trades
• Direct the recouped funds to the FDIC insurance fund so that it can be returned to depositors and used to pay workers and small businesses that were impacted
“What happened with Silicon Valley Bank put workers’ payroll at risk, threatened countless small businesses, and jeopardized our economy. Congress must act to remove the incentives that bank executives have to prioritize short term profits and their own compensation over the interests of customers and the public. The financial impact of SVB’s failure is a result of loosened financial regulations that passed under President Trump and mismanagement by bank executives,” said Congressman Schiff. “This collapse has made it clear that bank executives are still playing fast and loose with Americans’ hard-earned wages and investments, causing grave uncertainty and concerns about paychecks and livelihoods. We must act to make sure this never happens again, which is why I am introducing the DEPOSIT Act to claw back bonuses and stock profits of bank executives who put banks like SVB on a path to failure. There must be consequences for such reckless management of key institutions, and the DEPOSIT Act is just the first step in making sure executives are held accountable. We must, on a bipartisan basis, implement stricter legislation to regulate banks and protect depositors and workers.”
“This measure answers the common call for accountability to meet sheer corporate greed—Silicon Valley Bank top executives pocketing huge bonuses even as their business was collapsing and depositors’ money disappearing into thin air. Our legislation claws back self-dealing payouts and stock transaction benefits to top bank leaders, returning the money to taxpayers and protecting depositors. We won’t leave the American public holding the bag for another failed bank whose top executives lined their pockets on the way out. This commonsense step should be accompanied by other even broader systemic reforms,” said Senator Blumenthal.
“The actions of unscrupulous executives who put profits and bonuses over depositors is part of the reason why Silicon Valley Bank failed. I am proud to work with Rep. Schiff on this legislation to claw back improper compensation of executives at FDIC-seized banks and return this money to depositors. Congress must take action now to prevent another bank collapse and protect depositors, taxpayers, and small businesses,” said Congressman Levin.
The bill is co-sponsored by Reps. Jim McGovern (D—Mass.), Betty McCollum (D—Minn.), Raúl Grijalva (D—Ariz.), John Garamendi (D—Calif.), Chellie Pingree (D—Maine), Mark Takano (D—Calif.), Bonnie Watson Coleman (D—N.J.), Jimmy Gomez (D—Calif.), and Kevin Mullin (D—Calif.).
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