U.S. financial watchdogs plan to put more cracks in pay regulations for Wall Street executives, an outstanding requirement of the 2010 Dodd-Frank Act that has repeatedly failed to materialize. .
The Federal Deposit Insurance Corp. aims to bring the bill to a vote in the coming weeks, according to people familiar with the initiative. The officials spoke on condition of anonymity due to confidential deliberations. Still, the rule still needs approval from six regulators to take effect. Two previous campaigns to do so failed.
The incentive and compensation rules, long opposed by the financial industry, are meant to discourage risky behavior by giving executives and other high-profile employees more time to cash out their bonuses. Under the previous proposal, companies would have been allowed up to seven years to pay back wages related to misconduct, even if bonuses had already been vested. Financial companies will also be required to provide the watchdog with additional details about pay packages that may be made available to the public.
The agency previously proposed versions of this rule in 2011 and 2016. The push for new regulations was first reported by the Wall Street Journal.
Last year's regional bank turmoil sparked debate over the stability of the industry as a whole, but finalizing executive compensation rules would still be a major step forward. Imposing this rule beyond the FDIC would require action and approval from the Federal Reserve, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Federal Housing Finance Agency, and the National Credit Union Administration.
Each agency will move at its own pace, and there is no guarantee that all will be able to complete their efforts in time for the November elections that could bring about a change of government. Still, some have shown a willingness to take on the challenge.
In response to a request for comment, an SEC spokesperson pointed to a December speech given by Chairman Gary Gensler in which he said: ”
Representatives from the FDIC, Federal Reserve, OCC and NCUA declined to comment. An FHFA spokesperson did not immediately respond to a message.
