Sponsors (4)
The bill shifts more financial accountability onto banks and deferred executive pay to protect taxpayers and deter risky behavior, but it does so by delaying or reducing executive compensation and adding compliance and resolution complexities that could raise costs and complicate bank failures.
Taxpayers, depositors, homeowners, and middle-class families face lower risk of bearing losses from bank failures because covered banks must use deferred executive pay before tapping the Deposit Insurance Fund, and oversight of pay practices aims to curb incentive-driven risky behavior.
Consumers, investors, and the public gain stronger accountability because the bill enables regulators to rely on deferred executive compensation to satisfy fines and spurs review/rules of incentive pay that can deter and punish misconduct.
Former employees receive a specific protection: segregation rules prevent deferred compensation from being used to pay penalties for misconduct that occurs after they have left the firm.
Senior and executive employees will face delayed access to large portions of their pay and the risk of cancellation with limited remedy, which could reduce near-term income and hamper recruitment and retention at affected firms.
Banks—especially smaller covered institutions—will incur added compliance, administrative, and liquidity burdens to create and manage segregated deferment funds and cancellation policies, costs that may be passed to customers through higher fees or reduced services.
Requiring exhaustion of segregated deferment funds before using the Deposit Insurance Fund or NCUSIF could delay timely insurance assistance and complicate bank resolutions, potentially harming depositors and making crisis management more difficult.
Based on analysis of 3 sections of legislative text.
Mandates large deferrals of senior executive pay into funds that must pay fines and, for insured institutions, make depositors whole before federal deposit insurance is used.
Official title: To defer part of the compensation of senior employees of large financial institutions (and their subsidiaries), to use such deferred amounts to pay any civil or criminal fines that may be levied on the institution (or subsidiary), and for other purposes.
Introduced June 25, 2026 by Rashida Tlaib · Last progress June 25, 2026
Requires covered banks and financial firms to defer a large share of senior executives’ pay into a dedicated fund that can be used first to pay fines and to make depositors whole if the institution fails. Deferred payouts are limited by the fund’s balance, and institutions must cancel unpaid deferred compensation when funds are insufficient. Creates a legal priority that exhausts these deferment funds before use of federal deposit insurance backstops, and directs regulators to implement and enforce the new requirements for covered institutions and their subsidiaries.