This story appeared in Bank Digest.
At its April 26, 2016, meeting, the Federal Deposit Insurance Corporation board of directors approved a proposed rulemaking that would implement Section 956 of the Dodd-Frank Act, which requires the FDIC, Office of the Comptroller of the Currency, Federal Reserve Board, Securities and Exchange Commission, Federal Housing Finance Agency, and National Credit Union Administration to prohibit certain types of incentive-based payment arrangements.
The proposed rule, which replaces a never-acted-upon 2011 proposal, will be jointly published by the agencies. The NCUA approved the proposed rule at its April 21, 2016, meeting. Comments on the proposed rule are due by July 22, 2016.
Under the proposed rule, all covered institutions would be prohibited from offering any incentive-based compensation arrangements that would "encourage inappropriate risks" by providing a "covered person" with compensation that is "excessive" or "could lead to material financial loss" to the covered institution.