(The Center Square) — Arizona Independent Sen. Kyrsten Sinema is co-sponsoring a bill to crack down on bank executives who may try to financially benefit amid a collapse.
The legislation would take 100% of the profits from stocks sold by executives and tax “compensation bonuses” for executives who earn $250,000 that year by 90% in the 60 days of a financial institution failure and then give the funds to support the Federal Deposit Insurance Corporation, according to a statement.
“Our legislation provides accountability for bank mismanagement – and ensures the proceeds go towards protecting Arizona taxpayers from having to pay for any bank bailouts,” Sinema said in the statement about the Deliver Executive Profits on Seized Institutions to Taxpayers, or DEPOSIT, Act.
Sen. Richard Blumenthal, D-Connecticut, introduced the bill to put more money into the FDIC in situations where the agency would have to step in, such as with the recent Silicon Valley Bank collapse.
“This measure answers the common call for accountability to meet sheer corporate greed — Silicon Valley Bank top executives pocketing huge bonuses even as their business was collapsing and depositors’ money disappearing into thin air,” Blumenthal said in a statement. “Our legislation claws back self-dealing payouts and stock transaction benefits to top bank leaders, returning the money to taxpayers and protecting depositors. We won’t leave the American public holding the bag for another failed bank whose top executives lined their pockets on the way out. This commonsense step should be accompanied by other even broader systemic reforms.”
In the case of Silicon Valley Bank, top executives reportedly sold a sum of $84 million in stock over the past couple of years, CNBC reported on March 14. The outlet said that their actions are leading many to wonder if they took part in the illegal practice of insider trading.
First Republic Bank dealt with a similar situation with its executives, who reportedly sold $12 million in stock in recent months, according to the Wall Street Journal. The bank is getting help from larger ones in a last-ditch effort to stay afloat, despite their stock crashing this week.
The legislation also has the backing of several House Democrats.