02:55 PM EDT, 05/06/2024 (MT Newswires) -- (Updates with additional information.)

The Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Housing Finance Agency proposed a rule to regulate incentive-based compensation arrangements at financial institutions with over $1 billion in assets.

The proposed rule, in accordance with the Dodd-Frank Act of 2010, seeks to make incentive-based compensations more risk-sensitive. It will prohibit "incentive-based compensation arrangements that do not include risk adjustment of awards, deferral of payments, and forfeiture and clawback provisions," among other things, according to the FDIC Monday.

The act requires all appropriate government agencies to finalize any update to these practices, including FDIC, OCC, FHFA, the Federal Reserve Board of Governors, US Securities and Exchange Commission and the National Credit Union Administration.

NCUA expected to take action on the issue in the near future, while the SEC has included a rulemaking to implement the section 956 on its agenda. Until these agencies adopt the rulemaking, each will make it available on their websites, and accept comments.

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