Sponsors
The bill strengthens tools to hold bank executives and directors financially and professionally accountable—reducing moral hazard and protecting the Deposit Insurance Fund—but does so at the cost of higher compliance and litigation burdens, increased personal liability that may deter talent, and potential rights‑related concerns for affected individuals.
Taxpayers and the Deposit Insurance Fund are better protected because the bill strengthens authorities to recover compensation and limit losses from failed banks, reducing the fiscal burden of bank failures.
Bank executives and directors face stronger deterrents against excessive risk‑taking (through clawbacks, recoupment, and enforcement), which should reduce moral hazard and lower the likelihood of future bank failures.
Regulators (FDIC and banking agencies) gain clearer tools to pursue recoupment and clawbacks and to recover funds from culpable officers and directors, improving accountability after failures.
Banks will face higher compliance, administrative, and enforcement costs that are likely to be passed on to customers or taxpayers through higher fees, reduced services, or greater risk‑bearing by the Deposit Insurance Fund.
Heightened personal liability and enforcement risk may deter qualified executives and board members from joining or remaining at banks, shrinking the talent pool and potentially weakening governance.
Ambiguities in negligence standards and broad definitions of what counts as recoverable compensation create a high risk of protracted litigation and uncertain outcomes for former officers, directors, and banks.
Based on analysis of 6 sections of legislative text.
Gives FDIC and banking regulators new clawback, ban, and civil‑penalty powers to recoup pay and punish executives/directors of failed banks for negligent, knowing, or fraudulent conduct.
Introduced March 9, 2026 by Maxine Waters · Last progress March 9, 2026
Creates new tools for bank regulators and the FDIC to hold executives and directors of failed banks financially and professionally accountable. It lets the FDIC recoup compensation paid in the two years before a conservatorship or receivership (with no time limit for fraud), adds civil monetary penalties for negligent and knowing/reckless conduct, and lets regulators bar negligent parties from participating in bank affairs. The bill also directs regulators to finalize robust clawback rules and preserves existing enforcement powers.