Hello, this is Samantha Shares.
This episode covers N C U Aâs press release on U S Banking Agencies
Issuance of a proposed rule on Incentive Based Compensation.
The following is an audio version of that press release.
This podcast is educational and is not legal advice.
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The rule is two hundred pages long as a link to the full
text is in the show notes.
And now the press release.
Agencies Issue Proposal on Incentive-Based Compensation
(May sixth , twenty twenty four) â The Federal Deposit Insurance Corporation (F D
I C), the Office of the Comptroller of the Currency (O C C), and the Federal Housing
Finance Agency (F H F A), have adopted a Notice of Proposed Rulemaking (N P R)
to address incentive-based compensation arrangements, as required under section
956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (section 956).
The National Credit Union Administration (N C U A) is expected to take action
on the NPR in the near future.
The U.S.
Securities and Exchange Commission (SEC) has included a rulemaking to implement
section 956 on its rulemaking agenda.
This NPR is intended to advance stakeholder engagement needed to develop
a final incentive-based compensation rule.
The N P R re-proposes the regulatory text previously proposed in June
twenty sixteen, and seeks public comment in the preamble on certain
alternatives and questions.
Section 9 5 6 requires the appropriate Federal regulatorsâthe F D I C, the Board
of Governors of the Federal Reserve System (F R B), the O C C, the N C U A, the F H
F A, and the S E Câto jointly prescribe regulations or guidelines with respect to
incentive-based compensation practices at certain financial institutions that have
one billion dollars or more in assets.
Once the N P R is adopted by all six agencies, it will be published in the
Federal Register with a comment period of sixty days following publication.
Until then, each agency acting on the NPR will make it available on their respective
website, and will accept comments.
The proposed rule includes prohibitions intended to make
incentive-based compensation arrangements more sensitive to risk.
These include a prohibition on incentive-based compensation arrangements
that do not include risk adjustment of awards, deferral of payments, and
forfeiture and clawback provisions.
The prohibitions also emphasize the important role of sound governance and
risk management control mechanisms.
These prohibitions would help safeguard covered institutions from the types
and features of incentive-based compensation arrangements that
encourage inappropriate risks.
The recordkeeping and disclosure requirements in the proposed regulatory
text would assist the appropriate Federal regulator in monitoring
and identifying areas of potential concern at covered institutions.
Comments received on this N P R and those previously submitted
on the twenty sixteen N P R, will further inform efforts to address
incentive-based compensation arrangements, as required under section 956.
This concludes the press release.
The full rule is available in a link in the show notes.
If your Credit union could use assistance with your exam, reach out to Mark Treichel
on LinkedIn, or at mark Treichel dot com.
This is Samantha Shares and we Thank you for listening.