Incentivizing Safe and Sound Banking Act

I 118TH CONGRESS 1ST SESSION H. R. 4209 To prohibit stock sales by senior bank executives in certain circumstances. IN THE HOUSE OF REPRESENTATIVES JUNE 20, 2023 Ms. WATERS (for herself, Ms. VELA´ZQUEZ, Mr. SHERMAN, Mr. GREEN of Texas, Mr. CLEAVER, Mrs. BEATTY, Ms. GARCIA of Texas, Mr. HORSFORD, and Ms. TLAIB) introduced the following bill; which was re- ferred to the Committee on Financial Services A BILL To prohibit stock sales by senior bank executives in certain circumstances. 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 ‘‘Incentivizing Safe and 4 Sound Banking Act’’. 5 SEC. 2. STOCK SALE PROHIBITION. 6 (a) AUTHORITY TO PROHIBIT STOCK SALES RELAT- 7 ING TO CEASE AND DESIST ORDERS.—Section 8(b) of the 8 Federal Deposit Insurance Act (12 U.S.C. 1818(b)) is 9 amended by inserting at the end the following: 10 VerDate Sep 11 2014 22:02 Jul 26, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4209.IH H4209 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 4209 IH ‘‘(11) STOCK SALE PROHIBITION.—The author- 1 ity to issue an order under this subsection or sub- 2 section (c) includes the authority to prohibit the sale 3 of securities of the insured depository institution and 4 any affiliate of such insured depository institution 5 received and owned by any current or former officer 6 or director of the insured depository institution or 7 any institution-affiliated party that received such se- 8 curities as a form of compensation.’’. 9 (b) AUTOMATIC PROHIBITION.—Section 8 of the 10 Federal Deposit Insurance Act (12 U.S.C. 1818) is fur- 11 ther amended by adding at the end the following: 12 ‘‘(y) AUTOMATIC PROHIBITION OF STOCK SALE.— 13 ‘‘(1) IN GENERAL.—If a covered banking insti- 14 tution has a composite or component rating of 3, 4, 15 or 5 under the Uniform Financial Institutions Rat- 16 ing System (or an equivalent rating under a com- 17 parable rating system), or the appropriate Federal 18 banking agency issues a ‘matter requiring immediate 19 attention’ (or similar supervisory notice, as deter- 20 mined by the appropriate Federal banking agency) 21 to a covered banking institution, and the institution 22 does not remediate the issue by the deadline estab- 23 lished by the appropriate Federal banking agency, 24 any senior executive officer may not sell securities of 25 VerDate Sep 11 2014 22:02 Jul 26, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4209.IH H4209 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 4209 IH the covered banking institution or any affiliate of the 1 covered banking institution that the individual re- 2 ceived as a form of compensation, until the matter 3 is resolved to the satisfaction of the appropriate 4 Federal banking agency. 5 ‘‘(2) COVERED BANKING INSTITUTION.—In this 6 subsection, the term ‘covered banking institution’ 7 means— 8 ‘‘(A) a bank holding company with more 9 than $50,000,000,000 in consolidated assets; 10 ‘‘(B) a bank subsidiary of a bank holding 11 company described under subparagraph (A); or 12 ‘‘(C) a bank or savings association with 13 more than $50,000,000,000 in consolidated as- 14 sets.’’. 15 Æ VerDate Sep 11 2014 22:02 Jul 26, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6301 E:\BILLS\H4209.IH H4209 kjohnson on DSK79L0C42PROD with BILLS