The Recovering Executive Compensation from Unaccountable Practices Act, or RECOUP Act, would allow the FDIC to to take back all or part of the compensation received by bank executives during the two years before a collapse and would strengthen regulators’ ability to ban or remove executives who fail to appropriately oversee and manage their bank.
Bonuses and equity-based pay, but not salaries, of key executives, board chairs and inside directors would fall under the RECOUP Act’s purview.
Stock takes time to vest. So, if the bank fails they’ve alreadt lost their stock, haven’t they?
“We’ll show YOU how to manage money!” – politicians who got the USA into $32 trillions of debt.
Is this “compensation” in the modern “how DARE slave owners be compensated!!11!!!” sense? As in “payment for injury received”. So the only money the government can steal off them is what the government has paid them for destroying their businesses.
It never occurs to these types that it is the regulators who should be punished. US banks are the most highly regulated industry in the country. They cannot change the color of the towels in employee bathrooms without a myriad of forms, applications and approvals.
When a former boss of mine moved to Bear Stearns he had to convert all of the equity from the bank we worked for into Bear Stern’s stock. When they went bust in 2008 he lost everything.
We want your money!!!! This sounds like a good excuse.
There are executives who know that the axe is falling and bail out their shares beforehand. I have worked in companies where that has happened.
Sometimes I think US legislators spend more time on thinking up fancy acronyms for their laws than they do on the actual content.
However it is worth bearing in mind that not all company directors are the epitomy of honesty and good practise. Being able to do more than tell them they’ve been very naughty isn’t a bad idea.
Slightly off-topic, but there’s mystifying bank news in the UK today.
Despite being able to charge another 0.5% on the money they loan (money they create entirely cost-free), bank share prices have taken a hit.
Can anyone explain this, or is it just neoliberal incompetence?
A common arrangement is that a proportion of the bonus is paid in shares, which vest (i.e. become yours to sell) in thirds over three years. So it’s not meaningless to claw back the third which may have vested.
It’s usual for unvested shares to be forfeited if one leaves to work for a competitor. So a hiring bank will compensate one for the loss with an equivalent sum its unvested shares. A colleague left to work for Bear shortly before it failed: he was made good for his unvested shares with a number of Bear shares calculated according to the price on a set date, which was then the $2 JP had agreed to pay. The next day JP increased its bid to $10, so he made a 400% profit.
Despite being able to charge another 0.5% on the money they loan (money they create entirely cost-free), bank share prices have taken a hit.
Repossessions are going to skyrocket
Repossessions are good for banks as well, as you would know if you’d been paying attention.
The bank either collects increased mortgage payments with absolutely no increase in their costs, or collects the house. They can then sell the house for pretty much anything as they invented the loan in the first place.
This is the reality of late stage white supremacy.