Voters Across Party Lines Support Clawing Back Compensation from Failed Bank Executives
By Kate Sosland
This March, Silicon Valley Bank (SVB) collapsed after gross risk management — making it the largest bank to fail since the Great Recession of 2008. The failure resulted in growing economic instability and prompted another major bank, Signature Bank, to fail as well.
Silicon Valley Bank failed because of executives’ mismanagement of interest rate risk. However, due to weaknesses in our current federal law, SVB’s executives were able to get and keep their bonuses. Greg Becker, SVB’s CEO, received $9.9 million in total compensation in 2022 with a $1.5 million cash bonus. He also sold nearly $30 million in stock, including $3.6 million days before the bank’s failure.
The Senate Banking Committee has considered critical proposals over the past year to penalize bank executives’ high-risk strategies and prevent future bank failures, including the Failed Bank Executives Clawback Act and the Recovering Executive Compensation Obtained from Unaccountable Practices (RECOUP) Act.
U.S. Senators Elizabeth Warren, Catherine Cortez Masto, Josh Hawley, and Mike Braun introduced the Failed Bank Executives Clawback Act this past March. This bipartisan legislation would permit regulators to collect all or part of the compensation that was paid out to the executives of failed banks in the five years before their banks failed.
Following a similar approach, the RECOUP Act — introduced by Chair of Senate Banking Committee Sherrod Brown and Sen. Tim Scott — would allow banks’ boards or the Federal Deposit Insurance Corp to claw back all or part of compensation from the last two years. The Senate Banking Committee cleared the RECOUP Act for a floor vote with bipartisan support.
In a new survey, Data for Progress asked 1,239 likely voters about their attitudes toward bank executives and proposed regulations. A majority of all likely voters (81 percent) think CEOs of large banks make too much income, including 85 percent of Democrats, 84 percent of Independents, and 75 percent of Republicans.
We also asked voters if they think large banks are taking too much risk, and whether they support or oppose more regulation on the banking system. A majority of all likely voters across party lines (66 percent) think banks are taking too much risk and support increased regulations to protect the economy. This includes 77 percent of Democrats, 67 percent of Independents, and 55 percent of Republicans.
These results signal that voters across party lines are concerned about banks’ unregulated powers and their impact on our economy. As Congress considers legislation to claw back failed banking executives’ compensation, majorities of Democratic, Independent, and Republican voters believe large banks require more regulation.
Kate Sosland (@kate_sosland) is the communications intern at Data for Progress.