Removing Barriers Blog

Comment Letter on NCUA Incentive-Based Compensation Rule
Posted July 22, 2016 by CUNA Advocacy

Today we filed a comment letter with the NCUA on the Joint Agency Incentive Based Compensation proposed rule.  The requirements in the proposed rule would impact credit unions with $1 billion or more in assets, with additional requirements for credit unions with over $50 billion in assets.  The comment letter details why this regulation is overly burdensome and not necessary for credit unions.  

The proposed rule would (1) prohibit incentive-based payment arrangements that NCUA determines would encourage inappropriate risks by certain financial institutions by providing excessive compensation or that could lead to material financial loss; and (2) require those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate Federal regulator. 

Unfortunately, the rule is required by the Dodd-Frank Act, so all of the banking regulators and the Securities and Exchange Commission were required by law to pass a regulation adopting the Dodd-Frank incentive based compensation requirements.  We urged the NCUA to minimize, as much as possible, the impact on all credit unions that would be covered by the requirements because  excessive compensation has not been given as a reason for a credit union failure as has happened in a small number of banks.