NCUA, Banking Regulators Still Not Ready to Issue Compensation Rule

Learn why the agency listed the incentive-based compensation rule under ‘long-term actions’ in its newly released Spring regulatory agenda.

David Baumann


Jun 16



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David Baumann

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David Baumann

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Agency lists rule under ‘long-term actions’ in newly released Spring regulatory agenda.

Although it was due in 2011, the NCUA and other banking regulators do not have a clear vision on when they will issue a rule governing incentive-based compensation—a hot topic following the recent bank failures.

The agencies this week listed the rule in the “long-term actions” section of their Spring regulatory agendas.

Long-term actions are defined as “items under development but for which the agency does not expect to have a regulatory action within the 12 months after publication of this edition of the Unified Agenda.”

The NCUA agenda also lists several proposed and final rules the agency anticipates issuing in the next six months.

Backstory and Context

The compensation rule deadline was included in the Dodd-Frank Act. The regulation, which is meant to be developed with all the banking regulators, is supposed to prohibit incentive-based compensation plans that encourage inappropriate risk-taking at financial institutions.

The regulators issued a proposal in 2016, but a final rule was never adopted.

Pressure From Democrats

With the recent bank failures, Democrats have been putting the regulatory agencies under pressure to act.

“The recent bank failure of Silicon Valley Bank and reported bonuses issued to its leadership further underscore the urgency and importance of this rule’s implementation,” wrote Sen. Gary Peters, D-Mich., in a March letter to the regulators.

House Financial Services Committee ranking Democrat Rep. Maxine Waters, D-Calif., echoed those sentiments in her own March letter to regulators.

“Your agencies must finish that long-overdue rulemaking this year and ensure it also includes a robust claw back requirement and consider taking further measures so that executives are not rewarded with big bonuses if their bank is mismanaged or fails,” she wrote.

What Else Is in the NCUA’s Agenda?

In its regulatory agenda, the NCUA also states that:

–The agency is contemplating its next steps after it issued a proposed rule governing the purchase of banks by credit unions.

–NCUA officials are reviewing comments submitted on its proposed rule to require federal credit unions to adopt a succession plan for officers and other key employees. The agenda does not indicate if or when the agency will issue a final rule.

–The agency may issue a proposed rule providing federal credit unions with more flexible investment options.

–NCUA officials are still reviewing comments submitted on a proposed rule that would require that overdraft policies include a reasonable time limit for members to either deposit funds or obtain a loan to cover each overdraft.


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