Sponsors (4)
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
The bill shifts more of the cost and accountability for executive misconduct onto financial firms and their deferred-pay mechanisms—reducing taxpayer exposure and curbing risky pay incentives—but it also raises compliance and liquidity burdens for banks, can lower or delay compensation for employees, and may complicate bank resolution and prompt legal challenges.
Taxpayers and depositors are less likely to bear the cost of bank failures because deferred executive pay must be used before tapping the Deposit Insurance Fund and oversight aims to reduce compensation-driven losses.
Ordinary workers, homeowners, and communities gain greater financial stability if limits on risky, compensation-driven behavior reduce the likelihood of banking crises, recessions, and job losses.
Consumers, investors, and the public benefit from stronger accountability because the bill creates internal funding sources (segregated deferment funds) to pay fines and penalties rather than shifting those costs to external creditors or taxpayers.
Senior and other financial-sector employees will face reduced or delayed pay, which could lower near-term income and make recruitment and retention harder for banks.
Banks — especially smaller covered institutions — will incur additional compliance, administrative, and liquidity burdens to establish and manage segregated deferment funds, costs that could be passed to customers through higher fees or reduced services.
Requiring segregation and exhaustion of deferment funds before using insurance funds could delay timely Deposit Insurance Fund/NCUSIF assistance and complicate the resolution of failing banks, potentially risking depositor access or orderly resolution.
Based on analysis of 3 sections of legislative text.
Requires covered financial firms to defer large portions of senior pay into segregated funds that pay fines and make depositors whole before federal insurance funds are used.
Requires large banks and other covered financial institutions to defer and segregate a large share of senior executives’ pay into a dedicated “deferment fund,” uses that fund first to pay fines or make depositors whole if the institution fails, and allows cancellation of unpaid deferred amounts if the fund is insufficient. Creates new repayment, segregation, and use rules for deferred compensation and gives federal banking regulators authority to implement and enforce the rules.