Incentivizing Safe and Sound Banking Act
Rep. Waters Introduces Bill to Block Bank Executives From Selling Stock During Financial Trouble
This bill was recently introduced and is currently being reviewed by the House Committee on Financial Services. It is in the early stages of the lawmaking process and no further actions are scheduled at this time. The bill is considered active as it waits for the committee to decide on its next steps.
Legislative Progress
This bill is led by a prominent Democrat but lacks the broad bipartisan support usually needed to pass major banking regulations through a divided Congress.
Key Points
- This bill would prevent senior executives at large banks from selling company stock they received as compensation when the bank is in financial trouble. It targets banks and bank holding companies with more than $50 billion in assets.
From policy text
“a bank holding company with more than $50,000,000,000 in consolidated assets”
View in full text - An automatic stock sale ban kicks in if a bank gets a low health rating (3, 4, or 5 on the government's rating scale) or fails to fix a serious problem flagged by regulators by a set deadline. The ban stays in place until the issue is resolved.
From policy text
“If a covered banking institution has a composite or component rating of 3, 4, or 5 under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system), or the appropriate Federal banking agency issues a `matter requiring immediate attention'”
View in full text - The bill also gives federal banking regulators the explicit power to include stock sale prohibitions in their cease-and-desist orders, covering current and former officers, directors, and other institution-affiliated parties.
From policy text
“The authority to issue an order under this subsection or subsection (c) includes the authority to prohibit the sale of securities of the insured depository institution and any affiliate of such insured depository institution received and owned by any current or former officer or director”
View in full text - The goal is to keep bank executives' personal finances tied to the health of their institution, discouraging risky behavior and preventing insiders from profiting by selling shares while their bank is failing.
From policy text
“any senior executive officer may not sell securities of the covered banking institution or any affiliate of the covered banking institution that the individual received as a form of compensation, until the matter is resolved to the satisfaction of the appropriate Federal banking agency.”
View in full text
Impact Analysis
Personal Impact
Milestones
Referred to the House Committee on Financial Services.
Introduced in House
The bill was officially filed and given a number. It now enters the legislative queue.
Votes
No votes have been recorded for this legislation yet.
Related News
2 articlesFINANCIAL STABILITY—House Democrats continue push for banking reforms
Ranking Member Maxine Waters reintroduced the Incentivizing Safe and Sound Banking Act (H.R. 7887), which would authorize regulators to restrict executive stock sales when banks receive adverse supervisory assessments or fail to remediate significant regulatory deficiencies.
House committee passes bank deregulatory package
Ranking Member Maxine Waters has pushed for increased oversight of the largest banks, including measures to restrict executive stock sales, as a counter-proposal to a Republican-led deregulatory package that recently passed the House Financial Services Committee.
Source Information
Document Type
Congressional Bill
Official Title
Incentivizing Safe and Sound Banking Act
Data Sources
Sponsor
Analysis generated by AI. Always verify with official sources.