FDIC adopts clawback rules for executives who cause bank collapse

News Brief

By Cydney Posner

Here's some rule-making that a lot of folks have been waiting for (and some have been battling against) . As reported by The Wall Street Journal, in Sheila Bair's last meeting as chair, the FDIC approved rules allowing the government to recover compensation from executives who cause a financial firm to collapse.  Mandated by Dodd-Frank, the rules authorize the FDIC to recover two years of payments made to senior executives and directors who are deemed "substantially responsible" for a firm's failure. According to the article, bank executives would be subject to clawback if they fail to perform with "the degree of skill and care an ordinarily prudent person in a like position would exercise under similar circumstances."

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