Federal regulators proposed new rules Thursday meant to curb risky behavior by bank executives, the latest regulations from President Obama’s 2010 financial reform law.
Executives at big banks would see their ability to collect bonuses significantly regulated under the proposed rule. They would have to wait four years before collecting 60 percent of incentive-based bonuses, and then the banks would be able to claw back those bonuses for up to seven years after they were given in case it turned out that the executive took actions that subsequently hurt the bank.
Under the proposed rule, bank executives would face stricter compensation rules the larger their bank, with banks with more than $250 billion in assets subjected to the highest standards. Banks with less than $1 billion in assets, community banks, would be exempted.
The rules, which would apply to banks and credit unions, were outlined by the National Credit Union Administration Thursday morning.
Other agencies are expected to consider the regulation in the weeks ahead. In total, six agencies that oversee the financial industry will be involved in the rulemaking: The Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Federal Reserve, the Office of the Comptroller of the Currency and the Securities and Exchange Commission as well as the National Credit Union Administration.
