Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. Lawmakers from both sides of the aisle are rallying behind President Joe Biden’s call to strengthen penalties for the executives at failed banks. But they have a short window to act and aren’t exactly coordinating as a clash with industry looms. By MM’s count, at least four executive accountability bills are germinating among members of the Senate Banking Committee alone. The primary goal is to make it easier for the government to claw back compensation from the CEOs of failed banks. Sen. Elizabeth Warren (D-Mass.) has made the biggest splash so far with a clawback bill co-sponsored by Republican Sens. Josh Hawley of Missouri and Mike Braun of Indiana. Sen. Mark Warner (D-Va.) has his own legislation, while Senate Banking Chair Sherrod Brown (D-Ohio) and Sen. Chris Van Hollen (D-Md.) have said they’re working on their own bills. "I talked to Senator Warren about it a little bit,” Sen. J.D. Vance (R-Ohio) said. “I think it was her idea. If it comes to the floor I'll likely vote for it." Will the proposals go anywhere? Even with backing from the president and bipartisan support, lawmakers are already signaling it will be tough to get done. Some House conservatives are balking. Rep. Byron Donalds (R-Fla.) said it’s “having government agencies decide compensation in a backdoor way” — what he calls “Monday morning quarterback stuff.” One of the biggest challenges is simply the calendar, and the likelihood that political urgency wanes as the banking system appears to stabilize. “We want to do it as quickly as possible,” Brown said last week. “People are really interested in it now. We know that when the … cameras are turned off and they go away, they lose momentum. That’s how powerful interest groups here work. They can slow things down enough that then they win.” Brown is right to signal that industry will fight the effort vigorously. Bank trade groups have yet to come out publicly against it, but as one bank lobbyist put it to MM, restricting executive pay is an issue that “engages the CEOs in ways that other regulations don’t.” “We think it’s such a good idea it should apply to all industries, and legislatures,” another banking industry source said. Even Braun, who is co-sponsoring Warren’s bill, said the odds are stacked against it now that the banking system appears to be on stronger footing. “Hardly any of them will get across the finish line, most likely because it's now fixed,” the Indiana Republican said. And to be sure, lawmakers could lean on regulators to accomplish at least some of their goals. Financial regulatory agencies have yet to finalize executive compensation restrictions mandated by the 2010 Dodd-Frank law, including clawback requirements. It’s been one of Dodd-Frank’s most delayed components, with proposals issued in 2011 and then in 2016 but never implemented. Agencies could hypothetically release a so-called interim final rule to make the safeguards effective while continuing to take public comment. “However well-intentioned, current legislative proposals have a snowball’s chance in hell of actually being adopted,” said Klaros Group partner Michele Alt, who worked on the rulemaking at the OCC. “But what is absolutely possible is for the regulators to act quickly and decisively to implement a law that’s already on the books.” Happy Monday morning — What do you think about clawing back CEO pay at failed banks? What’s happening with the Dodd-Frank executive compensation rule? Let us know: Zach Warmbrodt, Sam Sutton.
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