June 25, 2026
Ms. Tlaib (for herself, Mr. Lynch, Ms. Lee of Pennsylvania, and Mr. Green of Texas) introduced the following bill; which was referred to the Committee on Financial Services
To defer part of the compensation of senior employees of large financial institutions (and their subsidiaries), to use such deferred amounts to pay any civil or criminal fines that may be levied on the institution (or subsidiary), and for other purposes.
Section 1. Short title
This Act may be cited as the Bank Failure Accountability Act
.
Sec. 2. Findings
Congress finds the following:
(1)
Going back at least to the Wall Street crash of 1929, improper pay structures have contributed to financial crises in the United States.
(2)
Widespread financial misconduct led to the 2008 financial crisis, which caused the Great Recession. Compensation structures incentivized executives and employees to pursue short-term profits without regard for long-term risks to their firms or the broader financial system. While culpable employees and executives continued to receive extraordinary pay, homeowners, workers, and communities paid the price for their greed and recklessness.
(3)
As seen in the 2023 banking failures, misaligned incentives within the financial sector continue to fail to hold executives and their senior employees accountable for their actions. Silicon Valley Bank CEO Greg Becker enjoyed millions of dollars in incentive-based bonuses, while his bank mismanaged risks and failed to respond to regulator’s warnings. In the hours before the failure of Silicon Valley Bank, managers paid themselves millions of dollars for what they deemed to be superior performance.
(4)
Employees in the financial sector continue to walk away with generous bonuses while their firms break the law and undermine the stability of the financial system. Compensation incentives that promote inappropriate risk-taking are a threat to economic security.
Sec. 3. Deferment of senior employee compensation
(a) Deferment fund
Each covered financial institution and each subsidiary of a covered financial institution shall establish a deferment fund, which shall—
(1)
only contain compensation deferred under subsection (b); and
(2)
only be used as permitted by this section.
(b) Deferment of compensation
Each covered financial institution and each subsidiary of a covered financial institution shall—
(1)
each year, defer the compensation of each senior employee of the covered financial institution or subsidiary in an amount equal to at least 50 percent of the amount that the employee’s total compensation for the year exceeds 7 times the compensation of the median paid employee of the consolidated financial institution for the year;
(2)
place all compensation deferred under paragraph (1) into the deferment fund of the covered financial institution or subsidiary; and
(3)
after the end of the covered deferment period, if sufficient funds remain in the deferment fund, pay the senior employee the amount of compensation deferred and for which the covered deferment period ended.
(c) Use of deferment fund
(1) Use of fund to pay fines
If a covered financial institution or subsidiary of a covered financial institution is subject to a civil or criminal fine, the covered financial institution or subsidiary shall first pay such fine out of amounts contained in the deferment fund of the covered financial institution or subsidiary.
(2) Use of funds to make depositors whole
If a covered financial institution is a depository institution or a credit union and the depository institution or credit union fails, the depository institution or credit union shall use amounts in the deferment fund of the depository institution or credit union to ensure depositors do not lose any of their deposits. All amounts in the deferment fund shall be used before any amounts are paid from the Deposit Insurance Fund or the National Credit Union Share Insurance Fund, as applicable, for such purpose.
(d) Cancellation of compensation that cannot be paid from deferment fund
Each covered financial institution or subsidiary shall have in place a policy that cancels any compensation deferred under subsection (b) that cannot be repaid as described under subsection (b)(3), due to the deferment fund lacking sufficient funds.
(e) Treatment of deferred compensation of ex-Employees
With respect to an individual that has compensation deferred pursuant to subsection (b), but is no longer employed by the applicable covered financial institution or subsidiary, if the covered financial institution or subsidiary is required to pay a fine from its deferment fund for misconduct that occurred after the individual was no longer employed by the covered financial institution or subsidiary, the covered financial institution or subsidiary shall segregate the individual’s deferred compensation from other amounts in the deferment fund and shall not use such segregated amounts for any purpose other than repaying the individual pursuant to subsection (b)(3) or for the payment of another fine for misconduct that occurred while the individual was still employed by the covered financial institution or subsidiary.
(f) Rulemaking
The Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Securities and Exchange Commission may each issue such rules as may be necessary to carry out this section with respect to covered financial institutions and subsidiaries subject to supervision by the agency.
(g) Definitions
In this section:
(1) Appropriate Federal regulator
The term appropriate Federal regulator means—
(A)
the appropriate Federal banking agency, as defined under section 3 of the Federal Deposit Insurance Act;
(B)
the Federal Housing Finance Agency, in the case of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation;
(C)
the National Credit Union Administration, in the case of a credit union described under paragraph (6)(C); and
(D)
the Securities and Exchange Commission, in the case of a person described under subparagraph (B) or (D) of paragraph (6).
(2) Compensation
With respect to an employee, the term compensation means any financial remuneration, including salary, bonuses, incentives, benefits, severance, deferred compensation, or golden parachute benefits, and any profits that would be realized from the sale of the securities of the company employing the employee.
(3) Consolidated financial institution
With respect to a financial institution, the term consolidated financial institution means the financial institution and all subsidiaries of the financial institution.
(4) Covered deferment period
The term covered deferment period means—
(A)
with respect to a covered financial institution with less than $10,000,000,000 in consolidated assets, a number of years, to be determined by the appropriate Federal regulator if determined necessary by such appropriate Federal regulator, beginning on the date the compensation is deferred;
(B)
with respect to a covered financial institution with $10,000,000,000 or more, but less than $50,000,000,000, in consolidated assets, 2 years beginning on the date the compensation is deferred;
(C)
with respect to a covered financial institution with $50,000,000,000 or more, but less than $250,000,000,000, in consolidated assets, 6 years beginning on the date the compensation is deferred; and
(D)
with respect to a covered financial institution with $250,000,000,000 or more in consolidated assets, 8 years beginning on the date the compensation is deferred.
(5) Covered financial institution
The term covered financial institution means a financial institution with more than $1,000,000,000 in consolidated assets.
(6) Financial institution
The term financial institution means—
(A)
a depository institution or depository institution holding company, as such terms are defined, respectively, in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(B)
a broker or a dealer registered under section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o);
(C)
a credit union, as described in section 19(b)(1)(A)(iv) of the Federal Reserve Act;
(D)
an investment adviser, as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a));
(E)
the Federal National Mortgage Association; and
(F)
the Federal Home Loan Mortgage Corporation.
(7) Senior employee
The term senior employee means an employee of a covered financial institution or a subsidiary of the covered financial institution who—
(A)
is a senior executive officer;
(B)
has total annual compensation of more than $1,000,000;
(C)
with respect to a covered financial institution with $50,000,000,000 or more, but less than $250,000,000,000, in consolidated assets—
(i)
is in the top 2 percent of the most highly compensated employees in the consolidated financial institution; or
(ii)
has the authority to commit or expose 0.5 percent or more of the capital of the consolidated financial institution; or
(D)
with respect to a covered financial institution with $250,000,000,000 or more in consolidated assets—
(i)
is in the top 5 percent of the most highly compensated employees in the consolidated financial institution; or
(ii)
has the authority to commit or expose 0.5 percent or more of the capital of the consolidated financial institution.