This story appeared in Bank Digest.
In light of a recent scandal at Wells Fargo in which employees created numerous unauthorized deposit and credit card accounts, Sens. Bob Menendez (D-NJ), Tammy Baldwin (D-Wis), and Al Franken (D-Minn) have led a group of Democratic senators in sending a letter to federal regulators requesting that they strengthen a proposed "clawback" rule pursuant to the Dodd-Frank Act that aims to prohibit executive pay arrangements that promote excessive risk-taking or misconduct in the financial services industry.
Referring to Wells Fargo executives "who were both aware of the behavior and were instrumental in designing policies that led to the scandal" but who had "received hundreds of millions of dollars in bonus compensation," the senators said "we need tough rules that will ensure that executives who engage in this type of misconduct will have their bonuses clawed back so we can deter similar actions in the future."
They went on to list what they believe are three weaknesses in the proposed rule: the deferral period for bonuses (in which bonus pay is withheld for a period of time to determine if significant misconduct has occurred) is too short; clawbacks and downward adjustments of compensation are optional, not mandatory; and the triggers for clawbacks are too limited.