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Sen. Elizabeth Warren, D-Mass., unveiled legislation Wednesday that would make it easier to criminally charge – and lock up – executives for a company’s wrongdoing.
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The bill, called the Corporate Executive Accountability Act, continues the presidential candidate’s push to hold leaders more accountable for a firm’s alleged abuses. Warren also reintroduced a plan Wednesday that would ramp up scrutiny of big bank executives.
Warren’s bill would widen criminal liability to include “negligent executives” of corporations with more than $1 billion in annual revenue that have reached certain terms related to alleged wrongdoing. It would cover company leaders who, according to a summary from Warren’s office shared with CNBC:
- “Are found guilty, plead guilty, or enter into a deferred or non-prosecution agreement for any crime.”
- “Are found liable or enter a settlement with any state or Federal regulator for the violation of any civil law if that violation affects the health, safety, finances, or personal data of 1% of the American population or 1% of the population of any state.”
- “Are found liable or guilty of a second civil or criminal violation for a different activity while operating under a civil or criminal judgment of any court, a deferred prosecution or non-prosecution agreement, or settlement with any state or Federal agency.”
Executives could face up to a year in jail for a first violation, and up to three years for a second violation.
The legislation has little shot of getting through the GOP-held Senate and could face resistance in the business world. But it comes as Warren has emerged as one of the leading policy voices in a crowded 2020 Democratic presidential primary field that has put an emphasis on populism and working class issues.
It adds to a string of plans that Warren, a longtime Wall Street critic, has put forward to check companies accused of abusing consumers — and the executives who run them. In unveiling the new bill Wednesday, Warren’s office in part cited the well-compensated retirements of CEOs from Wells Fargo and Equifax, companies wracked by a fake bank account scandal and a colossal data breach, respectively.
Warren has long lamented a lack of punishment for negligent executives at companies accused of misdeeds, particularly after the 2008 financial crisis. Her legislation aims to encourage better corporate behavior by making leaders more responsible for a firm’s conduct.
“We all agree that any executive who intentionally breaks criminal laws and leaves a trail of smoking guns should face jail time,” Warren wrote in a Washington Post op-ed published Tuesday night. “But right now, they can escape the threat of prosecution so long as no one can prove exactly what they knew, even if they were willfully negligent.”
“If top executives knew they would be hauled out in handcuffs for failing to reasonably oversee the companies they run, they would have a real incentive to better monitor their operations and snuff out any wrongdoing before it got out of hand,” she continued.
The existing legislation Warren reintroduced Wednesday, called the Too Big to Jail Act, targets the financial industry more specifically. It would make a special inspector general within the Treasury Department permanent and widen its jurisdiction to include prosecuting financial crimes. The plan would also make executives at banks with $10 billion or more in assets report annually that they have found no criminal wrongdoing or civil fraud within the firm.
Warren’s proposals are only her latest that could reverberate in the business world during the early days of the 2020 Democratic presidential primary. She has already called to break up massive technology and agriculture companies, and put forward a wealth tax.
Those proposals have already sparked backlash in the business community. Her latest plan Wednesday will likely face criticism, too.
Still, the senator’s proposals could help her with a Democratic voting base that has increasingly embraced anti-corporate and Wall Street populism.
Warren had long called for the firing of ex-Wells Fargo CEO Tim Sloan, who resigned last week. In response to his announced departure Thursday, Warren said, “About damn time.”
“By the way, getting fired shouldn’t be the end of the story for Tim Sloan,” she tweeted Thursday. “He shouldn’t get a golden parachute. He should be investigated by the SEC and the DOJ for his role in all the Wells Fargo scams. And if he’s guilty of any crimes, he should be put in jail like anyone else.”