A joint incentive-based compensation rule from federal financial regulators is overly burdensome and not necessary for credit unions, CUNA told the NCUA in its comment letter on the proposal. The rule is required under the Dodd-Frank Act for all banking regulators, as well as the Securities and Exchange Commission.
“Compensation issues are not linked to many bank failures and no credit union failures,” CUNA wrote. “Thus, this rule should be crafted in a way that minimizes the impact on all financial institutions--especially credit unions--as it seeks to provide a solution to a problem that does not appear to exist, particularly for credit unions.”
The vast majority of covered credit unions will be subject to record-keeping requirements and some mandatory material loss and performance measure requirements for incentive-based compensation plans.
However, the proposal would provide regulators’ staff with the authority to impose more stringent requirements on financial institutions with $10 billion or more in assets.
“As proposed, these overly prescriptive requirements run the risk of placing an undue burden on covered credit unions,” CUNA wrote.
Specifically, the proposal would:
Covered institutions would be assigned to one of three levels, based on average total consolidated assets: