Incentivizing Safe and Sound Banking Act
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Proposes to restrict certain bank executives from selling stock if their institution faces safety, soundness, or risk management issues.
What it does
This bill would authorize the Federal Deposit Insurance Corporation to prohibit bank officers, directors, or affiliated parties from selling stock received as compensation during proceedings related to unsafe or unsound banking practices. Additionally, the proposal would automatically bar senior executive officers at large banks from selling such stock if the institution receives a specific risk management rating or has an unresolved supervisory notice from a regulator.
Who is affected
This bill directly affects officers, directors, and bank-affiliated parties who receive stock as compensation and are involved in cease-and-desist proceedings for unsafe or unsound banking practices. Additionally, senior executive officers at large banks are affected if their institutions receive specific low risk management ratings or are under unresolved supervisory notices. The Federal Deposit Insurance Corporation and other banking regulators are also impacted as they are granted the authority to enforce these stock sale prohibitions.
Key provisions
- Stock sale prohibitions during cease-and-desist proceedings. Allows the Federal Deposit Insurance Corporation to prohibit bank officers, directors, or affiliated parties from selling stock received as compensation during proceedings related to unsafe or unsound practices.
- Automatic stock sale restrictions for large bank executives. Prohibits senior executive officers at large banks from selling stock if the institution receives a specific risk management rating.
- Restrictions based on unresolved supervisory notices. Automatically bars senior executive officers at large banks from selling stock if the bank is currently under an unresolved supervisory notice issued by a banking regulator.
Fiscal impact
Not applicable: No CBO cost estimate available
Effective dates
Not applicable: Official Summary does not address effective dates
Relationship to existing law
The bill expands the Federal Deposit Insurance Corporation's existing authority during cease-and-desist proceedings for unsafe or unsound practices and modifies regulatory oversight protocols regarding stock sales by senior executives at large banks under supervisory notices.
Stated purpose
The bill aims to address unsafe or unsound banking practices by restricting the ability of bank officers, directors, and senior executives to sell stock received as compensation. These restrictions apply during certain regulatory proceedings, following poor risk management ratings, or while a large bank is under an unresolved supervisory notice.