The Federal Deposit Insurance Corp. board of governors approved a rule that gives the agency power to recoup executive compensation from corporate officers and directors who lead financial institutions into ruin. The rule, which is part of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, creates an executive claw back provision that allows federal regulators to recover any executive or director compensation received two-years prior to a firm landing in the FDIC’s hands. If some type of fraud is tied to the firm’s collapse, the regulator’s power over executive compensation is not time-barred. The updated provision is part of the FDIC’s rewrite of the Orderly Liquidation Authority, or OLA, which guides how the banking agency takes over the assets of failed banks. As part of the updated liquidation process, the FDIC will first have to investigate how a  senior executive or director performed and the results of his or her performance. The FDIC must prove that any losses that came from the executives’ poor performance “materially contributed” to the bank’s failure. Write to Kerri Panchuk.