US financial regulators are to try again to control the compensation of Wall Street CEOs, an unfulfilled mandate of the Dodd-Frank Act of 2010 that has kept falling short.

The Federal Deposit Insurance Corp (FDIC) intends to vote on a proposal in the upcoming weeks, according to individuals familiar with the project who spoke about private discussions and requested not to be named. Still, before becoming operative, the regulations would need to pass six regulatory bodies. Two previous attempts to accomplish this were failed.

The banking industry has long opposed the incentive-compensation laws, which are designed to prevent hazardous behaviour by making executives and other high-profile staff wait longer to cash out their bonuses.

A previous plan, even if the bonus was already vested, would have allowed firms to withhold income linked to wrongdoing for up to seven years. Watchdogs would also need to receive additional information from financial corporations about remuneration packages that might be made public.

Versions of the rule were previously proposed by agencies in 2011 and 2016. The Wall Street Journal had already reported on the fresh drive for regulations.

While discussions about the soundness of the business as a whole were sparked by last year’s crisis in regional banks, completing CEO compensation standards would still be a significant improvement.

In addition to the FDIC, the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Securities and Exchange Commission (SEC), the Federal Housing Finance Agency (FHFA), and the National Credit Union Administration (NCUA) would all need to take action and grant permission before the rules could be implemented.

The agencies would all proceed at different rates, and there’s no assurance that they would finish the work in time for the November elections that could result in a change of government. However, some have expressed a desire to give it a shot.

An SEC representative cited agency head Gary Gensler’s remarks from December in response to a request for comments, saying, “We stand ready to work with our fellow regulators to fulfil this mandate and through re-proposing rules in this area.”

There were no comments available from representatives for the FDIC, Fed, OCC, NCUA and the FHFA.

(Adapted from BusinessTimes.com)

Categories: Economy & Finance, HR & Organization, Regulations & Legal, Strategy