Executives at financial firms would no longer be able to buy insurance to protect themselves against compensation clawbacks or civil penalties, under legislation introduced by U.S. Representative Barney Frank.
The bill, Frank said on Wednesday, is aimed at protecting the intent of the 2010 Dodd-Frank financial reform law, the 2002 Sarbanes-Oxley Act and other laws that let federal regulators recoup compensation or impose fines on individuals who break the law or engage in unsafe conduct.
Insurers now offer coverage that reimburses bankers whose compensation is confiscated.
"The creation of insurance policies to insulate financial executives from clawbacks is one more effort by some in the industry to perpetuate a lack of accountability," Frank, a Democrat and co-author of Dodd-Frank, said in a statement.
The clawback provision was ; INSERTed into the Dodd-Frank law in response to public anger that executives at banks and other Wall Street firms such as AIG were still being paid large salaries and bonuses despite mistakes that fueled the 2007-2009 financial crisis.