H.R. 7886

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7886 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 7886

To provide Federal financial regulators with clawback authority over 
executive compensation and additional industry prohibition and civil 
money penalty authority with respect to executives whose negligence 
caused financial loss to the applicable financial institution, and for 
other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

March 9, 2026

Ms. Waters introduced the following bill; which was referred to the 
Committee on Financial Services

_______________________________________________________________________

A BILL

To provide Federal financial regulators with clawback authority over 
executive compensation and additional industry prohibition and civil 
money penalty authority with respect to executives whose negligence 
caused financial loss to the applicable financial institution, 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 ``Failed Bank Executives 
Accountability and Consequences Act''.

SEC. 2. SENSE OF CONGRESS.

It is the sense of the Congress that--
(1) financial regulators and law enforcement agencies 
should fully exercise the maximum extent of their authorities 
to investigate and use available enforcement tools to hold 
executive officers and board members at Silicon Valley Bank, 
Signature Bank, First Republic Bank, and any other bank that 
fails to be fully accountable for any misconduct in which they 
are found to have engaged; and
(2) the Board of Governors of the Federal Reserve System, 
the Office of the Comptroller of the Currency, the Board of 
Directors of the Federal Deposit Insurance Corporation, the 
National Credit Union Administration Board, the Securities and 
Exchange Commission, the Federal Housing Finance Agency should 
jointly finalize the regulations or guidelines required under 
section 956 of the ``Investor Protection and Securities Reform 
Act of 2010'', and those regulations or guidelines should 
include robust clawback requirements.

SEC. 3. CLAWBACK AUTHORITY.

(a) In General.--Section 8 of the Federal Deposit Insurance Act (12 
U.S.C. 1818) is amended by adding at the end the following:
``(x) Recoupment of Compensation From Executive Officers and 
Directors.--
``(1) In general.--During any period in which the 
Corporation is acting as conservator or receiver for an insured 
depository institution, the Corporation may recover, from any 
current or former executive officer or director of such insured 
depository institution whose negligence caused financial loss 
to such insured depository institution, any compensation 
received during the 2-year period preceding the date on which 
the Corporation was appointed as the conservator or receiver of 
the insured depository institution, except that, in the case of 
fraud, no time limit shall apply.
``(2) Rulemaking.--The Corporation shall promulgate 
regulations to implement the requirements of this subsection, 
including defining the term `compensation' to mean any 
financial remuneration, including salary, bonuses, incentives, 
benefits, severance, deferred compensation, or golden parachute 
benefits, and any profits realized from the sale of the 
securities of the insured depository institution (or the 
securities of an affiliate of the insured depository 
institution).''.
(b) Clawback Authority Relating to Orderly Liquidation Authority.--
Section 210(s)(1) of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act is amended to read as follows:
``(1) In general.--The Corporation, as receiver of a 
covered financial company, may recover from any current or 
former executive officer or director whose negligence caused 
financial loss to the covered financial company any 
compensation received during the 2-year period preceding the 
date on which the Corporation was appointed as the receiver of 
the covered financial company, except that, in the case of 
fraud, no time limit shall apply.''.

SEC. 4. REMOVAL AND PROHIBITION AUTHORITY IN THE CASE OF INSTITUTION 
FAILURE.

(a) In General.--Section 8(e) of the Federal Deposit Insurance Act 
(12 U.S.C. 1818(e)) is amended--
(1) by redesignating paragraphs (3), (4), (5), (6), and (7) 
as paragraphs (4), (5), (6), (7), and (8), respectively; and
(2) by inserting after paragraph (2) the following:
``(3) Suspension, removal, and prohibition from 
participation orders in the case of institution failure.--
Whenever the appropriate Federal banking agency determines that 
an institution-affiliated party has negligently caused 
financial loss to any insured depository institution that has 
failed, the appropriate Federal banking agency for the 
depository institution may serve upon such party a written 
notice of the agency's intention to prohibit any further 
participation by such party, in any manner, in the conduct of 
the affairs of any insured depository institution.''.
(b) Conforming Amendment.--The Federal Deposit Insurance Act (12 
U.S.C. 1811 et seq.) is amended--
(1) in section 8--
(A) in subsection (e)--
(i) in paragraph (3), by striking ``under 
paragraph (1) or (2)'' each place it occurs and 
inserting ``under paragraphs (1), (2), or 
(3)''; and
(ii) in paragraph (7), as so redesignated, 
by striking ``paragraph (7)(A)'' and inserting 
``paragraph (8)(A)'';
(B) in subsection (f), by striking ``subsection 
(e)(3)'' and inserting ``subsection (e)(4)'';
(C) in subsection (g)(1)(D)(ii), by striking 
``paragraph (1), (2), or (3) of subsection (e)'' and 
inserting ``paragraph (1), (2), or (4) of subsection 
(e)''; and
(D) in subsection (j), by striking ``subsection 
(e)(6)'' and inserting ``subsection (e)(7)''; and
(2) in section 10(k)(6)--
(A) in subparagraph (A)(i), by striking ``section 
8(e)(4) for written notices or orders under paragraph 
(1) or (2) of section 8(e)'' and inserting ``section 
8(e)(5) for written notices or orders under paragraph 
(1), (2), or (3) of section 8(e)''; and
(B) in subparagraph (B), by striking ``paragraphs 
(6) and (7) of section 8(e)'' and inserting 
``paragraphs (7) and (8) of section 8(e)''.

SEC. 5. FINES FOR FAILED BANK EXECUTIVES.

(a) In General.--Section 8(i)(2) of the Federal Deposit Insurance 
Act (12 U.S.C. 1818(i)(2)) is amended--
(1) by redesignating subparagraphs (D), (E), (F), (G), (H), 
(I), (J), and (K) as paragraphs (E), (F), (G), (H), (I), (J), 
(K), and (L), respectively; and
(2) by inserting after subparagraph (C), the following:
``(D) Fines for contributing to institution 
failure.--
``(i) First tier.--Notwithstanding 
subparagraphs (A), (B), and (C), any executive 
officer or director who has negligently caused 
financial loss to any insured depository 
institution that has failed shall forfeit and 
pay a civil penalty of not more than $25,000 
for each day during which such conduct 
occurred.
``(ii) Second tier.--Notwithstanding 
subparagraphs (A), (B), and (C), any executive 
officer or director who knowingly or recklessly 
caused financial loss to any insured depository 
institution that has failed shall forfeit and 
pay a civil penalty in an amount not to exceed 
the applicable maximum amount determined under 
subparagraph (E) for each day during which such 
conduct occurred.''.
(b) Conforming Amendments.--Section 8(i)(2) of the Federal Deposit 
Insurance Act (12 U.S.C. 1818(i)(2)), as amended by subsection (a) is 
further amended--
(1) in subparagraph (E), by striking ``to subparagraph 
(C)'' and inserting ``to subparagraph (C) or (D)'';
(2) in subparagraph (F)--
(A) by striking ``under subparagraph (A), (B), or 
(C)'' and inserting ``under subparagraph (A), (B), (C), 
or (D)''; and
(B) by striking ``subparagraph (H)'' and inserting 
``subparagraph (I)'';
(3) in subparagraph (G), by striking ``under subparagraph 
(A), (B), or (C)'' and inserting ``under subparagraph (A), (B), 
(C), or (D)''; and
(4) in subparagraph (H), by striking ``under subparagraph 
(A), (B), or (C)'' and inserting ``under subparagraph (A), (B), 
(C), or (D)''.

SEC. 6. RULE OF CONSTRUCTION.

This Act and the amendments made by this Act may not be construed 
to limit the enforcement authorities that financial regulators and law 
enforcement agencies had, prior to the date of enactment of this Act, 
to hold executive officers and board members of insured depository 
institutions and covered financial companies accountable for any 
misconduct in which they are found to have engaged.
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