A bipartisan group of senators released draft legislation Wednesday that would claw back executive pay in the five years leading up to a bank’s failure, following President Joe Biden’s call on Congress to take action.

Democratic Sens. Elizabeth Warren of Massachusetts and Catherine Cortez Masto of Nevada were joined by Republican Sens. Mike Braun of Indiana and Josh Hawley of Missouri on the draft bill that would direct the Federal Deposit Insurance Corporation to confiscate executive compensation when it takes over a failed bank.

“Americans are sick and tired of fat cat bankers paying themselves handsomely while risking other people’s hard earned money,” Warren said in a statement.  “It’s time for Congress to step up and strengthen the law so bank executives bear the cost of failure, not line their pockets and walk away scot-free.”

In the wake of the collapse of Silicon Valley Bank of Santa Clara, Calif., and Signature Bank of New York City, the second- and third-largest bank failures in U.S. history, the White House called on Congress to authorize the FDIC to confiscate executive bonuses and stock sale proceeds after a bank failure. 

SVB CEO Greg Becker is reported to have sold $3.6 million in company stock before the failure, and bank employees received bonuses hours before the FDIC took over the bank. 

“Bank executives who make risky investments with customers’ money shouldn’t be permitted to profit in the good times, and then avoid financial consequences when things go south,” Hawley said in a statement. “This legislation puts the executives’ own profits on the line, and that’s exactly as it should be.”

Hawley previously criticized federal banking regulators for stepping in to ensure that all deposits at SVB and Signature would be protected, including those exceeding the $250,000 cap for deposit insurance, on the grounds that smaller, well-managed banks could be on the hook to cover the costs. 

The FDIC by law is required to replenish the deposit insurance fund through a fee assessed on banks, though the regulator has discretion to tailor the fee for banks of different sizes. The FDIC estimated covering deposits at both banks would result in a $22.5 billion hit to the deposit insurance fund. 

Braun referred to the protection for depositors in a statement released by his office.

“If the federal government is going to step in to cover bank deposits well beyond the $250,000 FDIC limit, bank executives need an extra incentive to manage risk,” the statement said. “This bill to claw back bank executive compensation when the FDIC comes in to bail out a bank is necessary.”

The bipartisan draft bill would apply to executive salaries, bonuses, performance pay and company stock awarded as part of compensation in the five years leading up to a bank’s failure. It would also bar the government from bailing out investors in a failed bank.

The draft would apply a harsher penalty than bills introduced by Sen. Richard Blumenthal, D-Conn., and Rep. Adam B. Schiff, D-Calif., that would impose a 90 percent tax on bonuses and claw back stock sale proceeds made in the 60 days leading up to a failure. Like the draft bill, the Blumenthal-Schiff bills would funnel confiscated pay into the FDIC’s deposit insurance fund. 

Senate Banking Chairman Sherrod Brown, D-Ohio, and Sens. Chris Van Hollen, D-Md., and Kyrsten Sinema, I-Ariz., and House Financial Services ranking member Maxine Waters, D-Calif., have said they’re crafting legislation that would allow regulators to claw back executive compensation. Van Hollen and Sinema sit on the Senate Banking Committee, along with Warren and Cortez Masto.