Senate Banking Committee to Vote on Banker Pay Reform
WASHINGTON, D.C. – The U.S. Senate Banking Committee on June 21 will mark up and vote on the RECOUP Act, legislation drafted by committee Chair U.S. Sen. Sherrod Brown (D-Ohio) and Ranking Member U.S. Sen. Tim Scott (R-S.C.), to reform banker pay in the wake of the failures of Silicon Valley Bank (SVB), Signature and First Republic. Bartlett Naylor, financial policy advocate for Public Citizen, released the following statement:
“We welcome the Senate Banking Committee’s banker pay reform legislation and applaud the chair’s diligent efforts to craft a bipartisan bill that may actually become law.
“As Public Citizen demonstrated in the days after the March 10 collapse of SVB, bad banker pay structure led to the reckless decisions that tanked it. A recent Public Citizen report showed that where there’s banker misconduct, there’s inevitably a paycheck incentivizing it. And a subsequent report from the Federal Reserve Board affirmed our link between SVB’s failure and its bad pay structure.
“What’s needed in true clawback reform is a long look-back period. Bad decisions may not play out for years. The clawback must be mandatory, not left to the discretion of what could be industry friendly regulators. And since clawbacks have proven difficult – much of the money may be spent or hidden offshore – real reform requires a collective deferral fund. Such a fund, forfeitable to compensate uninsured depositors, effectively deputizes each banker to police every other banker. That’s better accountability than provided by a bank’s board, stockholders, bondholders, even regulators.”