Bank Failure Accountability Act
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
The Bank Failure Accountability Act aims to hold senior executives at large financial institutions accountable for past misconduct and potential future risks. It requires these institutions to establish a ‘deferment fund’ where a portion of their senior employees’ compensation is set aside. This deferred compensation can then be used to pay civil or criminal fines levied against the institution, and, crucially, to protect depositors’ funds in the event of a bank failure. The bill also outlines specific rules for determining how much compensation is deferred and how long it must be held.
Key provisions
- Establishes a ‘deferment fund’ for senior employee compensation at large financial institutions.
- Requires a minimum 50% deferral of compensation exceeding 7 times the median employee pay.
- Funds in the deferment fund can be used to pay fines against the institution.
- Prioritizes using deferment fund to protect depositors’ funds in case of bank failure.
- Defers compensation for a period determined by the institution’s asset size.
- Defines ‘senior employee’ based on compensation and authority.
- Allows regulatory agencies to create rules to implement the act.
- Specifies how deferred compensation is handled for former employees.
Who is affected
- Large financial institutions (with over $1 billion in assets)
- Subsidiaries of large financial institutions
- Senior executives and employees of financial institutions
Bill text
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Sponsors
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