# Plain Language Summary: FAIR Fund Act of 2023

This bill creates a new system to hold senior executives and highly paid employees at large financial institutions accountable by forcing them to set aside a portion of their compensation into a special fund. The money in this fund would then be used to pay any fines the bank receives for breaking the law or, if the bank fails, to protect depositors' savings before using government insurance programs.

Here's how it works in practice: If a senior executive at a major bank earns significantly more than seven times what the median employee makes, the bank must defer at least 50 percent of that excess pay into a special account. For example, if a bank executive makes $10 million while the median employee makes $100,000, the bank would set aside roughly half of the amount above $700,000. This deferred money stays locked up for a set period—ranging from 2 to 8 years depending on the bank's size—unless the bank gets hit with a fine. If that happens, the bank must pay the fine from this deferred compensation fund first, before using any other money. If the deferred compensation fund runs out, any remaining deferred pay is simply canceled and the executive never receives it.

The bill only applies to large financial institutions with more than $1 billion in assets, including banks, credit unions, investment firms, and mortgage companies. It targets senior executives and highly compensated employees—those making over $1 million annually or holding significant decision-making power over the bank's money. The goal is to create a direct financial consequence for misconduct: executives would lose their own deferred bonuses if their institution breaks the law, giving them a personal incentive to prevent wrongdoing rather than just pursuing short-term profits.

FAIR Fund Act of 2023

Tlaib, Rashida

Fostering Accountability In Remuneration Fund Act of 2023 or the FAIR Fund Act of 2023 This bill requires large financial institutions to defer part of senior employees' compensation and deposit the deferred compensation in a fund established by the institution. This fund must be used to pay civil or criminal fines levied against the institution or, if the institution is a bank or credit union, to make depositors whole in the event of a failure. If sufficient funds exist at the end of a specified period of time, senior employees must receive their deferred compensation.