Bank Failure Accountability Act

The Bank Failure Accountability Act requires large financial institutions to set aside a significant portion of senior employee compensation into a special fund to ensure accountability for future misconduct. Specifically, the law mandates that executives and high-earning staff defer at least half of their pay that exceeds seven times the median worker's salary, holding this money in reserve for a period ranging from two to eight years depending on the bank's size. If the institution faces fines for illegal actions or fails, these withheld funds must be used first to pay penalties or to return money to depositors, preventing the use of taxpayer resources. Any deferred compensation that cannot be repaid due to the fund running out of money will simply be cancelled, ensuring that employees do not receive full bonuses if their firm causes harm. This measure directly targets high-asset banks, credit unions, and other major financial entities to align executive incentives with long-term stability.