Stopping Bonuses for Unsafe and Unsound Banking Act
Summary
The "Stopping Bonuses for Unsafe and Unsound Banking Act" (H.R. 6705) aims to prevent large banking institutions from issuing discretionary bonus payments to senior executives when the institution is under a "matter requiring immediate attention" notice from a federal banking agency. The bill stipulates that bonus payments are prohibited until the issue is resolved or a remediation plan is accepted and implemented. The bill defines covered banking institutions as those with over $50 billion in consolidated assets.
Expected Effects
The likely effect of this bill is to incentivize large banking institutions to address regulatory concerns promptly and effectively. It also aims to hold senior executives accountable for unsafe or unsound banking practices. This could lead to more responsible financial management and reduced risk of financial instability.
Potential Benefits
- Incentivizes banks to quickly address regulatory concerns.
- Potentially reduces the risk of financial instability by promoting responsible banking practices.
- May deter risky behavior by senior executives.
- Could improve public trust in the banking system.
- May lead to better risk management practices within large banking institutions.
Most Benefited Areas:
Potential Disadvantages
- May discourage risk-taking that could lead to innovation and economic growth.
- Could lead to talent leaving institutions if bonuses are perceived as unfairly restricted.
- May increase regulatory burden and compliance costs for banks.
- Potential for unintended consequences if remediation plans are not effectively implemented.
- Could create loopholes or unintended avoidance strategies by banking institutions.
Constitutional Alignment
The bill appears to align with the Constitution's implied powers related to regulating commerce and ensuring financial stability. Congress has the power to regulate interstate commerce, which includes banking activities. The bill does not appear to infringe on any specific constitutional rights or protections.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).