U.S. Representative Drafts Bill To Go After Banking Executives

U.S. Rep. Adam Schiff (D-Calif.) tweeted Monday that he is drafting a bill to go after executives at failed banks. Schiff's bill is in response to the collapse of Silicon Valley Bank and he said it will recoup bonuses, stock options and other compensations. 

What Happened: According to a report from Bloomberg, Silicon Valley Bank’s CEO Greg Becker sold more than $3 million worth of stock leading up to the bank’s collapse. Schiff pointed out that in 2008, some politicians tried to go after banking executive compensations, but were unsuccessful.

See Also: Why Silicon Valley Bank Collapsed: A Simple Explainer

This time, Schiff said, the plan to make executives return funds needs to succeed. 

“My bill would clawback ill-gotten gains by allowing Treasury to recoup bonuses, stock profits, and other compensation from execs at a failed bank,” Schiff tweeted. “They shouldn’t reap a financial windfall from mismanagement or greed.”

Becker’s stock sales on Feb. 27 were his first sales in more than a year according to Bloomberg. Many are alleging Becker knew the bank was in trouble and decided to cash in.

Why It Matters: According to a report by CNN, employees from SVB were upset with Becker’s actions and lack of leadership. If Schiff’s bill is successful, it could help curb bank mismanagement in the future. If banking executives can get off scot-free with millions of dollars despite their banks failing, they may not be incentivized to work through difficult situations. 

Schiff said that when banks fail, it’s often everyday people that feel the pain through economic uncertainty and missed paychecks. It makes sense to make sure that executives feel some of the pain as well.

Read Next: SVB Financial CEO Sold $3.6M In Shares Prior To Bank's Collapse: Here Are Other Insider Sellers

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