The Archive

COMP’ COMEUPPANCE

Clawing back banker pay has bipartisan buy-in on the Hill

We’ve heard a lot of chatter on Capitol Hill about one legislative fix or another since Silicon Valley Bank and Signature Bank collapsed last month. Progressives want to repeal a 2018 deregulation bill. Expanding federal deposit insurance levels got a lot of play.

Here’s the deal: Financial services reform bills are always a tough sell on the Hill.

So we were surprised to hear widespread bipartisan support for an idea first pushed by the White House – make it easier for federal bank regulators to claw back bank executives’ pay if their institution fails. Sens. Elizabeth Warren (D-Mass.), Josh Hawley (R-Mo.), Catherine Cortez Masto (D-Nev.) and Mike Braun (R-Ind.) introduced a bill last week that would allow that.

The legislative road ahead is tricky, but the fact that there’s any bipartisan interest in clawback reform is significant.

The idea is broadly popular among Democrats. Rep. Jim Himes (D-Conn.), who serves on the House Financial Services Committee, told us that bank officials shouldn’t get paid “in cases where management is or should be aware” of significant problems but took “no meaningful action.”

Yet the more eye-opening takeaway is how many Republicans in both chambers are also open to the idea.

Rep. Bryan Steil (R-Wis.), who serves on Financial Services, said the proposal was “absolutely worthy of looking at,” especially regarding banker bonuses.

Rep. Blaine Luetkemeyer (R-Mo.), a former banker who also sits on the panel, said if managers did so poorly they might “face jail time or could be sued and lose in a court of law. I think that would be something that we could probably look at and support – to try and claw back in that situation.”

Rep. William Timmons (R-S.C.) told us he surprised his staff with an interest in clawback legislation.

“There just needs to be consequences,” Timmons said. “It doesn’t need to be draconian, but if you made a whole bunch of money and then you cause your bank to fail, and it adversely impacts millions of people, something should happen.”

There’s notable interest from Republicans on the Senate Banking Committee too. Sen. Mike Crapo (R-Idaho), the panel’s former chair, said he was “generally reluctant” to give the federal government more power over private sector management.

But “when there are actions that are abusive and sometimes even, in fact, illegal, I don’t see a problem with the regulatory authorities being able to claw back that kind of compensation,” Crapo added.

There are, of course, a million places along the way where this effort could fall apart. Many of the Republicans open to the thrust of this reform effort want it to focus on bank management guilty of crimes or clear ethical violations.

A bill that’s more open-ended would be a tougher sell.

“I’m open to the concept,” Sen. Thom Tillis (R-N.C.) said of a clawback proposal. “What I want to do is make sure that we have clear definitions.”

Republican opposition could also grow if the banking lobby mobilizes to kill the proposal.

Rep. Byron Donalds (R-Fla.) said he would “absolutely not” support any legislative change. Rep. Frank Lucas (R-Okla.) said former bank executives trying and failing to find employment at a new bank was “the ultimate clawback.”

And several lawmakers have told us they’re skeptical that Congress gets more than one shot at a financial policy bill this year. Progressives who are seeking additional reforms beyond strengthening clawback powers might resist a skinny bill, however.

We asked Warren about that dilemma. Here’s her response:

– Brendan Pedersen

LONE STAR STATE

Texas delegation staying out of Gonzales primary fight

It’s no secret that Rep. Tony Gonzales (R-Texas) has been annoying Republicans both back home and on Capitol Hill for his approach to immigration.

Gonzales’ resistance to a hardline border security bill, in part, prompted a censure by the Texas GOP last month. He’s also been subject to political attacks from conservative Republicans and attracted three potential primary challengers.

But members of the Texas GOP delegation – the biggest Republican group in the House – appear reluctant to get drawn into the fight. No one we spoke with showed any interest in helping to replace Gonzales with a more conservative Republican.

“I know he’s said some things, but I’m not following it,” Rep. Roger Williams (R-Texas) told us.

Rep. Ronny Jackson (R-Texas) said he would “absolutely not” get involved in a primary effort against Gonzales. Jackson called Gonzales a “good friend,” and said he wants to sit down with his colleague to talk through any concerns over the party’s proposals.

Even Rep. Chip Roy (R-Texas), whose border security bill has been held up by Gonzales and moderate Republicans, said he didn’t want to engage when asked about primary threats to his fellow Texan.

“I’m not getting into that game,” Roy said. “We’re here to do a job. I have no interest in getting into personality stuff. I feel pretty strongly about that, so let other people figure that out.”

Gonzales has been the most vocal critic of Roy’s signature border bill, and the two have frequently tussled over the measure in recent weeks. The Roy plan would permit the Homeland Security secretary to bar undocumented migrants from entering the United States until the federal government gets “operational control” of the U.S.-Mexico border.

In a tweet last week, Gonzales even threatened to vote against a debt-limit increase if Republicans bring “un-Christian, anti-immigrant bills to the floor.”

Roy then took the argument to the House floor, calling it “un-Christian to allow migrants to die and call that compassion.”

Rep. Brian Babin, who co-chairs the Border Security Caucus, was the only Texas Republican we spoke to who was explicit in his criticism of Gonzales. Babin said Gonzales, who is a “good friend,” is “absolutely wrong” and should know better.

Even before the row over immigration, Gonzales was rebuked by some Republicans for supporting a sweeping gun control bill following the Uvalde massacre in his district last year. He also faced criticism for backing a bill to codify same-sex marriage.

The two-term lawmaker now must fend off at least two declared primary challengers. One is Julie Clark, the Medina County GOP chair who initiated the censure efforts against Gonzales. Retired Immigration and Customs Enforcement Agent Victor Avila is also running.

Frank Lopez Jr., a self-described “U.S. Border Patriot” who ran against Gonzales as an independent last cycle, is exploring another bid too, according to local news reports.

Gonzales brushed off his potential primary challengers when we asked and touted his Q1 fundraising numbers, an impressive $1.2 million-haul we scooped last week.

Meanwhile, conservative members outside the state delegation continue to Gonzales out by name. Rep. Matt Gaetz (R-Fla.) blamed Gonzales for delayed action on border legislation at a recent Trump rally. We also reported Rep. Andy Biggs (R-Ariz.), another border hawk, met with Avila, Gonzales’ challenger, last week at Capitol Hill Club.

It’s not yet clear if Gaetz, Biggs or anyone else will endorse a conservative challenger to Gonzales. But we’ll keep our eyes on it.

— Mica Soellner

2024 SENATE

Cornyn ramps up fundraising for ‘24 Senate Republicans

Sen. John Cornyn (R-Texas), one of the top GOP fundraisers, is stepping up his campaign operation in order to boost Senate Republicans heading into the 2024 cycle.

Cornyn is setting up his joint fundraising committee once again, the Cornyn Victory Committee, according to a source familiar with the operation. The committee has already taken in more than $1 million, with events scheduled for a number of GOP senators in the next few months.

Cornyn has done or is scheduled to headline events for Republican Sens. Marsha Blackburn (Tenn.), Kevin Cramer (N.D.), Deb Fischer (Neb.), Roger Wicker (Miss.) and Pete Ricketts (Neb.), with more being scheduled, said the source.

The Texas Republican raised more than $11 million through the Cornyn Victory Committee during the 2021-2022 cycle. Funds from the joint committee went to nearly 30 Senate campaigns and the NRSC.

Conryn also helped rake in another $9 million for the NRSC, candidates and incumbents. Cornyn’s haul trailed only Senate Minority Leader Mitch McConnell and former NRSC Chair Rick Scott (Fla.). The Texas Republican twice served as NRSC chair, and he’s developed a strong fundraising network in Texas and nationally.

Senate Democrats face a very tough map next year. They’re defending 23 seats versus only 10 for Republicans. No Senate GOP incumbents are running in states won by President Joe Biden in 2020, while three Democrats – Sens. Sherrod Brown (Ohio), Jon Tester (Mont.) and Joe Manchin (W.Va.) – are in states won by former President Donald Trump. Brown and Tester have already announced they’re running again, while Manchin won’t make up his mind until later in the year.

— John Bresnahan

THE CAMPAIGN

News: Rep. Elissa Slotkin’s (D-Mich.) Senate campaign raised $3 million in the first quarter of 2023, according to sources familiar with the fundraising efforts.

Some more details: 89% of donations were $100 or under. Donations came from 80 of Michigan’s 83 counties. Slotkin launched her Senate bid on Feb. 27, so these numbers represent roughly a month of fundraising.

Rep. Ashley Hinson (R-Iowa) will report raising more than $750,000 in the first quarter of 2023. Hinson is an appropriator and one of the up-and-coming lawmakers in the House GOP.

— Max Cohen

MOMENTS

11:30 a.m.: President Joe Biden will receive the daily briefing in the Oval Office.

1:30 p.m.: Press briefing by White House Press Secretary Karine Jean-Pierre.

2:45 p.m.: Biden will meet with his Council of Advisors on Science and Technology in the State Dining Room.

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