Tlaib Introduces Bill to Target Excessive Compensation for Bank Executives

WASHINGTON D.C.Congresswoman Rashida Tlaib (MI-12), member of the House Financial Services Committee (FSC), introduced the Fostering Accountability in Remuneration Fund Act, or FAIR Fund Act, as part of a legislative package from Democratic FSC members responding to the recent failures of Silicon Valley Bank, Signature Bank, and First Republic Bank, which were the 2nd, 3rd, and 4th largest individual bank failures in U.S. history. 

The FAIR Fund Act would require large financial institutions to place a portion of executive and senior employee compensation into a deferred fund that would get paid out between two years and eight years, depending on the size of the financial institution. In the case of a company’s failure and/or employee misconduct, the fund would be used to cover the costs of any fines and ensure that depositors do not lose any of their deposits.

“Time and again, we have seen executives and senior employees at large financial institutions pursue short-term profits at any cost because their compensation packages encourage excessive risk-taking,” said Congresswoman Tlaib. “Executives pocket millions of dollars while workers and communities pay the price for their greed and recklessness. The FAIR Fund Act reverses these corrupt incentives, allowing financial executives and senior employees to be held accountable for the consequences of their actions.”

In 2010, in the wake of the 2008 financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 956 of the Act tasked federal financial regulatory agencies with implementing a rule banning compensation incentives that encourage inappropriate risk-taking. However, this rule has yet to be finalized. The FAIR Fund Act would supplement the incentive-based compensation rules required—but not yet implemented—under Section 956 of Dodd-Frank. As the recent banking failures demonstrate, misaligned incentives continue to pose a threat to our financial system and Americans’ economic security.

This legislation is endorsed by prominent financial advocates and experts including Take On Wall Street, Americans for Financial Reform, and Public Citizen.

“When greedy executives steer their companies into the ground through risky decision making, they shouldn’t walk away with millions. Take On Wall Street applauds Rep. Tlaib for the FAIR Fund Act, which would disincentivize some of the worst behavior from CEOs by making sure they have more skin in the game,” said Jessica Church, Advocacy and Political Manager of Take On Wall Street.

“The public is hungry for wealthy executives to be held accountable for the harm their self-serving risk-taking has caused,” said Natalia Renta, Esq. Senior Policy Counsel of Americans for Financial Reform. “By setting aside a significant portion of pay that executives could lose in cases of failure of their financial institution or the levying of fines, the FAIR Fund Act would create a structure for ensuring accountability—and for helping to prevent the need for accountability in the first place.”

“Rep. Tlaib’s ingenious bill effectively deputizes every banker to police one another. That’s better oversight than provided by the board of directors, auditors, shareholders, bondholders and even regulators. These inside police are at work everyday with their own pay on the line if misconduct and reckless banking goes unchecked. Public Citizen heartily endorses this bill,” said Bartlett Collins Naylor, Financial Policy Advocate of Public Citizen.

A copy of the legislation can be found here.


Recent Posts

May 15, 2024

Tlaib Introduces Resolution Recognizing 76 Years of the Nakba

WASHINGTON, D.C. – Today, Congresswoman Rashida Tlaib (MI-12) introduced a House Resolution Recognizing the Nakba and Palestinian Refugees’ Rights. The Nakba, which means “catastrophe” in Arabic, refers to the mass expulsion of Palestinians from their homes and homeland during creation of the state of Israel (1947-49). The Nakba did not end in 1948, but continues […]

May 9, 2024

Tlaib, Sanders, Khanna, Merkley Introduce Legislation to Eliminate Medical Debt for Millions of Working Class Americans

WASHINGTON, D.C. — Reps. Rashida Tlaib (MI-12) and Ro Khanna (CA-17) with Sens. Bernie Sanders (I-Vt.) and Jeff Merkley (D-Ore.) introduced the Medical Debt Cancellation Act, legislation to eliminate all $220 billion in medical debt held by millions of Americans, wipe it from credit reports, and drastically limit the accrual of future medical debt.  The medical debt crisis has […]

May 8, 2024

Tlaib Announces Appropriations Requests for Fiscal Year 2025

WASHINGTON, D.C. — Today, Congresswoman Rashida Tlaib (MI-12) announced her priorities in the federal appropriations process for Fiscal Year 2025. One of the key ways to bring investments home to our district is through appropriations requests. Congresswoman Tlaib led several letters prioritizing the need for lead abatement, access to clean water, housing and health care […]