S. 1181

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1181 Introduced in Senate (IS)]

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118th CONGRESS
1st Session
S. 1181

To amend the Federal Deposit Insurance Act to improve financial 
stability, and for other purposes.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

April 18, 2023

Mr. Reed (for himself and Mr. Grassley) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
and Urban Affairs

_______________________________________________________________________

A BILL

To amend the Federal Deposit Insurance Act to improve financial 
stability, and for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Bank Management Accountability 
Act''.

SEC. 2. SYSTEMIC RISK DETERMINATION.

(a) In General.--Section 13(c)(4)(G) of the Federal Deposit 
Insurance Act (12 U.S.C. 1823(c)(4)(G)) is amended by adding at the end 
the following:
``(vi) Recoupment of compensation from 
senior executives and directors.--
``(I) In general.--The Corporation, 
as receiver or conservator of an 
insured depository institution under 
clause (i), may recover from any 
current or former senior executive or 
director of the insured depository 
institution, or of a covered affiliate 
with respect to the insured depository 
institution, who is substantially 
responsible for the failed condition of 
the insured depository institution, any 
compensation received during the 2-year 
period preceding the date on which the 
Corporation was appointed as the 
receiver or conservator of the insured 
depository institution, except that, in 
the case of fraud, no time limit shall 
apply.
``(II) Cost considerations.--In 
seeking to recover any compensation 
under subclause (I), the Corporation 
shall weigh the financial and deterrent 
benefits of that recovery against the 
cost of executing the recovery.
``(III) Personal liability.--Any 
liability insurance policy for a senior 
executive or director described in 
subclause (I) shall exclude from 
coverage any liability under this 
clause.
``(vii) Prohibition authority.--
``(I) In general.--The Corporation 
may take any action authorized by 
subclause (II), if the Corporation 
determines that--
``(aa) a senior executive 
or a director of an insured 
depository institution with 
respect to which the 
Corporation has taken action or 
provided assistance under 
clause (i), or of a covered 
affiliate with respect to such 
an insured depository 
institution, before the 
appointment of the Corporation 
as receiver or conservator, 
has, directly or indirectly--

``(AA) violated any 
law or regulation;

``(BB) violated any 
cease-and-desist order 
that has become final;

``(CC) violated any 
condition imposed in 
writing by a Federal 
agency in connection 
with any action on any 
application, notice, or 
request by the insured 
depository institution 
or covered affiliate 
(as applicable) or the 
senior executive or 
director (as 
applicable);

``(DD) violated any 
written agreement 
between the insured 
depository institution 
or covered affiliate 
(as applicable) and the 
Federal agency 
described in subitem 
(CC);

``(EE) engaged or 
participated in any 
unsafe or unsound 
practice; or

``(FF) committed or 
engaged in any act, 
omission, or practice 
that constitutes a 
breach of the fiduciary 
duty of that senior 
executive or director; 
and

``(bb) by reason of the 
violation, practice, or breach 
described in any subitem of 
item (aa), that senior 
executive or director has 
received financial gain or 
other benefit, and that 
violation, practice, or breach 
contributed to the failure of 
the insured depository 
institution.
``(II) Authorized actions.--The 
Corporation may serve upon a senior 
executive or director with respect to 
whom the Corporation has made a 
determination under subclause (I) a 
written notice of the intention of the 
Corporation to prohibit any further 
participation by that individual, in 
any manner, in the conduct of the 
affairs of any financial company for a 
period of time determined by the 
Corporation to be commensurate with 
that violation, practice, or breach, 
except that such period shall be not 
less than 2 years.
``(viii) Definitions.--In this 
subparagraph:
``(I) Compensation.--The term 
`compensation' means any direct or 
indirect financial remuneration 
received from an insured depository 
institution, or from a covered 
affiliate with respect to an insured 
depository institution, including 
salary, bonuses, incentives, benefits, 
severance pay, deferred compensation, 
golden parachute benefits, benefits 
derived from an employment contract or 
other compensation or benefit 
arrangement, perquisites, stock option 
plans, post-employment benefits, 
profits realized from a sale of 
securities in the insured depository 
institution or the covered affiliate 
(as applicable), or any cash or noncash 
payments or benefits granted to or for 
the benefit of a senior executive or 
director.
``(II) Covered affiliate.--The term 
`covered affiliate' means, with respect 
to an insured depository institution, 
any--
``(aa) bank holding company 
(as defined in section 2(a) of 
the Bank Holding Company Act of 
1956 (12 U.S.C. 1841(a))) that 
controls the insured depository 
institution;
``(bb) savings and loan 
holding company (as defined in 
section 10(a) of the Home 
Owners' Loan Act (12 U.S.C. 
1467a(a))) that directly or 
indirectly controls the insured 
depository institution;
``(cc) subsidiary of the 
insured depository institution; 
or
``(dd) affiliate (as 
defined in section 2 of the 
Bank Holding Company Act of 
1956 (12 U.S.C. 1841(k))) of 
the insured depository 
institution.
``(III) Director.--The term 
`director' means a member of the board 
of directors of a company, or of a 
board or committee performing a similar 
function to a board of directors, who 
has authority to vote on matters before 
the board or committee.
``(IV) Financial company.--The term 
`financial company' has the meaning 
given the term in section 201(a) of the 
Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 
5381(a)).
``(V) Senior executive.--The term 
`senior executive'--
``(aa) means any individual 
who participates or has 
authority to participate (other 
than in the capacity of a 
director) in major policymaking 
functions of a company, 
regardless of whether the 
individual has an official 
title or the title of the 
individual designates the 
individual as an assistant; and
``(bb) includes the 
chairman of the board, the 
president, any vice president, 
the secretary, the treasurer or 
chief financial officer, the 
general partner, and any 
manager of a company, unless 
the individual--

``(AA) is excluded, 
by resolution of the 
board of directors, the 
bylaws, the operating 
agreement, or the 
partnership agreement 
of the company, from 
participation (other 
than in the capacity of 
a director) in major 
policymaking functions 
of the company; and

``(BB) does not 
actually participate in 
major policymaking 
functions of the 
company.''.

(b) Regulations.--The Federal Deposit Insurance Corporation shall 
promulgate regulations to administer and carry out this section, in a 
manner that is not less stringent than the manner set forth in section 
380.7 of title 12, Code of Federal Regulations (as in effect on the 
date of enactment of this Act).

SEC. 3. ORDERLY LIQUIDATION AUTHORITY.

Title II of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 5381 et seq.) is amended--
(1) in section 210(s) (12 U.S.C. 5390(s)), by adding at the 
end the following:
``(4) Personal liability.--Any liability insurance policy 
for a senior executive or director described in paragraph (1) 
shall exclude from coverage any liability under this 
subsection.''; and
(2) in section 213(b) (12 U.S.C. 5393(b))--
(A) in paragraph (1)(C), by inserting ``and'' at 
the end;
(B) in paragraph (2), by striking ``; and'' and 
inserting a period; and
(C) by striking paragraph (3).
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