It’s going to take longer on Wall Street to pick up a full bonus check, if the National Credit Union Administration gets its way.
The regulator of credit unions proposed rules Thursday that would take from three to four the number of years it takes for incentive-based compensation to fully vest.
“Congress mandated action in this area because there were financial institutions which failed as a result of excessive risk-taking that was encouraged by incentive based compensation arrangements which rewarded senior officials based on the volume of business they generated, regardless of whether the institution subsequently made or lost money on that business,” NCUA vice chairman Rick Metsger said in a statement.
“Now as we all know, credit unions were not a primary cause of the financial crisis. They were primarily victims, which is why the NCUA took the lead in becoming the first financial institutions regulator to sue the Wall Street banks whose actions led to the crisis.”
The proposed regulations would break down differently for banks of certain sizes. The largest banks on Wall Street, or those that contain $250 billion and more in assets, requires that for four years, 60 percent of senior executives’ pay is deferred and that for “significant risk takers” 50 percent incentive pay is deferred.
For banks under $250 billion in assets, requirements for deferred compensation are slightly less onerous for executives. With the exception of death or disability, there is no way under NCUA’s proposal to speed deferred compensation.
The rules, initially required under the Dodd-Frank Act, were first proposed in 2011. The NCUA is the first to offer proposed rules.
Other agencies, including the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Federal Reserve Board of Governors, the Treasury Department’s Office of the Comptroller of the Currency, and the Securities and Exchange Commission, will also weigh in. A comment period on NCUA’s proposal will run until July 22.