Incentive-Compensation Restrictions

The OCC, FDIC, FHFA, and NCUA have revived what was in 2016 a proposal issued also by the FRB and SEC to revise incentive compensation at financial institutions in hopes of better alignment between compensation and safety and soundness.  Rules or formal guidelines were required by the 2010 Dodd-Frank Act to take effect nine months after enactment, but agreement has been hard to achieve as evidenced by a renewed proposal almost fourteen years after the law was passed to which key agencies have yet to consent even in proposed form.  The new proposal reissues the 2016 inter-agency agreement for another round of public comment in concert with asking questions about a few specific alternatives and many aspects of the prior approach. The next step if agreement is reached is unclear unless the FRB and SEC join in the inter-agency process also mandated by the Dodd-Frank Act although each of the agencies that reach agreement could issue freestanding guidelines or perhaps even a formal rule binding the entities over which they have jurisdiction, a process the FDIC in fact initiated in 2011.