What This Bill Does
This bill limits special assessments (extra charges) that the Federal Deposit Insurance Corporation (FDIC) can place on smaller banks. It also prevents banks from passing these assessment costs to customers and gives the FDIC power to reclaim bonus payments from bank executives whose institutions fail.
Who It Affects
Banks with less than $10 billion in total assets. Bank executives who received bonus or incentive-based compensation. Bank customers. The Federal Deposit Insurance Corporation (the federal agency that insures bank deposits).
Key Provisions
- The Federal Deposit Insurance Corporation cannot impose a special assessment on any bank with less than $10 billion in total assets (Sec. 2a).
- Banks required to pay special assessments related to the Silicon Valley Bank and Signature Bank resolution in March 2023 cannot increase customer fees or charges to offset the costs of these special assessments (Sec. 2b).
- The Federal Deposit Insurance Corporation has the authority to seek repayment of any incentive-based compensation (bonuses or payments based on financial performance) paid to bank officers during the one year before the FDIC takes control of the bank (Sec. 3).
- Bank officers who fail to repay incentive-based compensation to the Deposit Insurance Fund face a civil penalty equal to three times the amount of compensation they received (Sec. 3).
What Changes
If this bill becomes law, community banks with under $10 billion in assets gain protection from certain FDIC special assessments. Banks cannot pass assessment costs to customers through higher fees. Bank executives can be required to return bonuses paid in the year before their bank fails, with penalties of triple the bonus amount for non-compliance.
Important Definitions
- Incentive-based compensation: Any compensation granted, earned or vested based wholly or partly on reaching any financial reporting measure or other performance metric.
- Officer: Not specified in bill text.
II
118TH CONGRESS
1ST SESSION
S. 825
To provide limitations of special assessments on community banks, and for
other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 15, 2023
Mr. HAWLEY (for himself and Mr. BRAUN) introduced the following bill; which
was read twice and referred to the Committee on Banking, Housing, and
Urban Affairs
A BILL
To provide limitations of special assessments on community
banks, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Protecting Consumers
4
from Bailouts Act’’.
5
SEC. 2. LIMITATION ON SPECIAL ASSESSMENTS ON COM-
6
MUNITY BANKS.
7
(a) IN GENERAL.—The Federal Deposit Insurance
8
Corporation may not impose an assessment on any bank
9
with less than $10,000,000,000 in total assets in imposing
10
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•S 825 IS
a special assessment under section 13(c)(4)(G)(ii) of the
1
Federal
Deposit
Insurance
Act
(12
U.S.C.
2
1823(c)(4)(G)(ii)).
3
(b) PROHIBITION ON INCREASE OF FEES TO CUS-
4
TOMERS.—
5
(1) IN GENERAL.—No institution required to
6
pay
a
special
assessment
under
section
7
13(c)(4)(G)(ii) of the Federal Deposit Insurance Act
8
(12 U.S.C. 1823(c)(4)(G)(ii)) in connection with the
9
resolution of Silicon Valley Bank and Signature
10
Bank in March 2023 by the Department of the
11
Treasury shall increase any fees or charges to cus-
12
tomers of the institution in an attempt to offset the
13
costs of the special assessment.
14
(2) CIVIL PENALTY.—A violation of paragraph
15
(1) shall constitute a failure to pay an assessment
16
under section 18(h) of the Federal Deposit Insur-
17
ance Act (12 U.S.C. 1828(h)).
18
SEC. 3. FDIC BONUS CLAWBACK AUTHORITY.
19
Section 23(c)(4)(G) of the Federal Deposit Insurance
20
Act (12 U.S.C. 1823(c)(4)(G)) is amended by adding at
21
the end the following:
22
‘‘(vi) INCENTIVE-BASED
COMPENSA-
23
TION CLAW BACK.—
24
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•S 825 IS
‘‘(I)
DEFINITION.—In
this
1
clause:
2
‘‘(aa)
INCENTIVE-BASED
3
COMPENSATION.—The term ‘in-
4
centive-based compensation’ in-
5
cludes any compensation that is
6
granted, earned, or vested based
7
wholly or in part upon the attain-
8
ment of any financial reporting
9
measure or other performance
10
metric.
11
‘‘(bb) OFFICER.—The term
12
‘officer’ has the meaning given
13
the term in section 240.16a–1 of
14
title 17, Code of Federal Regula-
15
tions.
16
‘‘(II) CLAWBACK.—
17
‘‘(aa) IN GENERAL.—If the
18
Corporation takes other action or
19
provides assistance under this
20
subparagraph, the Corporation
21
shall have authority to seek reim-
22
bursement to the Deposit Insur-
23
ance Fund any amount of incen-
24
tive-based compensation paid to
25
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•S 825 IS
an officer of an insured deposi-
1
tory institution for which the
2
Corporation is appointed receiver
3
during the 1-year period ending
4
on the date on which such ap-
5
pointment is made.
6
‘‘(bb) CIVIL PENALTY.—Any
7
officer who fails to reimburse the
8
Deposit Insurance Fund under
9
item (aa) shall be liable to the
10
United States for a civil penalty
11
equal to 3 times the amount of
12
the incentive-based compensation
13
received by the officer.’’.
14
Æ
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