FOR IMMEDIATE RELEASE
Jan. 9, 2024
Regulators Must Move Ahead on Long-Delayed Executive Pay Reform
Washington, D.C. – Financial regulators tasked with executive pay reform under Section 956 of the Dodd-Frank Act of 2010 should act swiftly to protect consumers, depositors, and the public from excessive risk-taking of the sort that led to a banking crisis last year.
With the swearing-in of Tanya Otsuka to the board of the National Credit Union Administration yesterday, all bank regulators now have majorities that support moving forward with this important rulemaking, which Congress wrote into Dodd-Frank 14 years ago.
“With all key regulators in place, the time is now for decisive action to protect the public from the reckless actions of executives, who too often put their own greed ahead of the health and stability of their companies and the financial system,” said Natalia Renta, senior policy counsel for corporate governance and power at Americans for Financial Reform Education Fund. “We cannot afford to wait until another Silicon Valley Bank-style crisis for regulators to finalize a strong executive pay rule — a task Congress assigned them over a decade ago.”
In Section 956 of the Dodd-Frank Act, Congress tasked six agencies with implementing a rule to ban incentive-based executive compensation that encourages “inappropriate” risk-taking. The agencies proposed a rule in 2011 and another in 2016, but neither crossed the finish line. The 2023 banking crisis precipitated renewed, repeated calls for the regulators to take action, the NCUA lacked a majority willing to take action.
The rule would be issued by six agencies: the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC), the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA).
For more information, see the letter from a coalition of groups supporting this measure. Rep. Nydia Valezquez and Sen. Chris Van Hollen also called on regulators to act after last year’s banking crisis.