US banking regulation bill gains bipartisan support
June 27, 2023
Democrat Senate banking chair Sherrod Brown has gained a rare level of bipartisan support for a bill designed to bring heavier regulation to the US banking sector.
In cooperation with Republican Senator Tim Scott, Brown rallied support from all his committee Democrats and all but two Republicans to support the bill.
The bill will grant the Federal Deposit Insurance Corporation the power to remove bonuses and stock sale proceeds paid to executives of failed banks from two years leading up to the bank’s collapse.
It will also strengthen the regulator’s ability to assess civil penalties on executives who fail to manage their banks adequately.
Banks will also be required to include standards around responsible bank management in their bylaws.
Regulators will also be empowered to place restrictions on new acquisitions by mega banks.
Senators Elizabeth Warren (Democrat) and J.D. Vance (Republican) led an earlier bill which would empower regulators to impose stiffer penalties against bank executives. But Warren backed Brown and Scott’s version, calling it a “reasonable compromise.”
Brown incorporated changes sought by other Democrats and Republicans. The merger restrictions were requested by Senator Vance and the Federal transparency measure came from Senators Kyrsten Sinema (independent) Cynthia Lummis (Republican) and Thom Tillis (Republican).
Brown commented: “One of the joys of this job, is how do you put together the interests of everybody and keep enough people happy to pass it, but always with the goal in mind of making sure we hold these executives — who were overcome by their greed and incompetence — accountable.”
It serves as Congress’s first big legislative response to the economic turmoil triggered by the high-profile collapses of Silicon Valley Bank, Signature Bank and First Republic that took place earlier this year.
In March, the Biden administration urged Congress to enhance regulators’ capacity to ensure bank executives can be held individually responsible for the shortcomings of their institution.
Brown and Scott then sent a formal request to Silicon Valley Bank and Signature Bank executives to appear before the committee and answer for their mismanagement.
In May, the Committee held a hearing with the executives of Silicon Valley and Signature Banks, where the executives were pressed on their management failures that led to these banks’ collapse.
Last Updated: 27 June 2023