U.S. Sens. Elizabeth Warren (D-MA) is among a group of senators sponsoring a bill that seeks to hold big bank executives accountable if the banks fail and they disregard prudent risk management.
The Failed Bank Executives Clawback Act of 2026 (S. 4050) would require the Federal Deposit Insurance Corporation (FDIC) to hold executives of large failed banks — like Silicon Valley Bank, which failed three years ago — financially responsible for some of the costs those failures impose on the rest of the banking system and the economy. It would require the FDIC to claw back all or part of the compensation large bank executives received over the three-year period preceding a bank’s failure.
“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. “This bill helps ensure that failed bank executives are held accountable for their risk-taking — and that they forfeit the huge bonuses they got while driving their bank into the ground.”
Along with Warren, the bipartisan bill was sponsored by Sens. Josh Hawley (R-MO), Catherine Cortez Masto (D-NV), Ruben Gallego (D-AZ), Katie Britt (R-AL), Kevin Cramer (R-ND), Mark Warner (D-VA), Chris Van Hollen (D-MD), Tina Smith (D-MN), Andy Kim (D-NJ), Raphael Warnock (D-GA), John Fetterman (D-PA), Lisa Blunt Rochester (D-DE), and Angela Alsobrooks (D-MD).
“Bank executives who make risky investments with customers’ money shouldn’t be permitted to profit in the good times, and then avoid financial consequences when things go south,” Hawley said. “This legislation puts the executives’ own profits on the line, and that’s exactly as it should be.”
When Silicon Valley Bank went under, said Gallego, people lost their jobs as well as their investments and savings.
“Meanwhile, the same irresponsible c-suite executives who ran the bank to the ground cashed in tens of millions of dollars in bonuses and stock then left the taxpayers holding the bag. That’s not how our system should work,” Gallego said. “This bill would hold bank executives financially accountable and make sure they aren’t able to walk away rich while hardworking Americans lose their savings and jobs.”