Senior executives blamed for the collapse of a major bank would be forced to give up bonuses and other compensation under new bipartisan legislation that was to be introduced Wednesday.
The measure, led by Sen. Elizabeth Warren, D-Mass., and Sen. Josh Hawley, R-Mo., would require the Federal Deposit Insurance Corp. to claw back pay from top bank executives when failures leave the financial system on the hook for billions of dollars in losses.
According to an early draft reviewed by The Washington Post, the bill would give the FDIC the authority and the obligation to seize bonuses and other compensation, including proceeds from recent stock sales, collected by senior executives before their bank failed.
"When big banks fail, weak regulators too often let the failed bank's wealthy executives slip away into the night while American taxpayers foot the bill," Warren said in a statement.
The legislation also has support from Republican Sens. Katie Britt of Alabama and Kevin Cramer of North Dakota, along with 10 Democrats, including Sens. Catherine Cortez Masto of Nevada and Ruben Gallego of Arizona.
The proposal arrives three years after the collapse of Silicon Valley Bank, which touched off fresh calls for tougher punishment of executives at failed institutions. Despite those demands, regulators still rarely claw back executive pay.
The FDIC oversees roughly 4,300 banks nationwide, most of them small, insures trillions of dollars in deposits, and plays a central role in unwinding failed banks.
Silicon Valley Bank collapsed after failing to manage risks tied to rapidly rising interest rates. Regulators had repeatedly flagged problems at the bank but did not act decisively enough to stop its downfall.
At the time, SVB was the second-largest bank failure in U.S. history. Signature Bank and First Republic also failed that year.
Post-collapse reviews found SVB's compensation structure encouraged short-term gains instead of responsible risk management.
"Compensation packages of senior management through 2022 were tied to short-term earnings and equity returns and did not include risk metrics," Fed governor Michael Barr wrote in a review of SVB's failure. "As such, managers had a financial incentive to focus on short-term profit over sound risk management."
Congressional critics have zeroed in on former SVB CEO Greg Becker, who received nearly $40 million in compensation between 2019 and 2023, even as the bank accumulated 31 unresolved supervisory issues.
Company filings also showed that a trust owned by Becker sold $3.6 million in shares days before the bank disclosed a $1.8 billion loss that triggered the fatal run on the bank on March 9. Regulators seized SVB the next day.
Becker has defended his compensation.
"From the standpoint of that compensation, that's determined by the board of directors," Becker said during a May 2023 Senate hearing. "And so, I know they believed it is fair, and I believe that they were accurate."
Past attempts to expand clawback powers have failed in Congress, though supporters argue such penalties would better align executive incentives with a bank's long-term stability.
Nicole Weatherholtz ✉
Nicole Weatherholtz, a Newsmax general assignment reporter covers news, politics, and culture. She is a National Newspaper Association award-winning journalist.
© 2026 Newsmax. All rights reserved.