CUNA Says It Has 'Significant Concerns' Over NCUA Pay Plan
WASHINGTON-CUNA is calling on NCUA to address what it called "significant concerns" before proceeding with any new rules related to executive compensation.
As first reported by Credit Union Journal, the agency is following the FDIC's lead in attempting to enact new rules that seek to align compensation with long-term performance at the credit union. The trade group said that the proposal, mandated as part of the Dodd-Frank reform bill and requiring federal financial regulators to issue a joint rule or guideline on incentive-based compensation arrangements, is not meant to address general compensation, such as salaries. Instead, said CUNA, the new rule is meant to address performance-related bonuses and only in areas that might expose an institution to higher risk, such as lending.
In a letter to NCUA, CUNA stressed several points, including:
• Credit unions generally have not been engaged in the kinds of abusive arrangements addressed under Dodd-Frank, and the NCUA's rule should distinguish credit unions from other types of institutions such as banks and others that have provided such arrangements to their employees and others officials. CUNA called on NCUA to fully consider whether guidelines could be issued for credit unions, even if the other regulators issued a regulation for the entities they regulate.
• The FDIC proposal would apply certain prohibitions regarding incentive-based compensation to banks with $50 billion or more in assets. The proposal indicates credit unions with assets of $1 billion and more would be covered by these prohibitions. CUNA said that NCUA "should correct this and not have a rule that would potentially subject relatively smaller credit unions to standards that only apply to the largest banks.
• CUNA wants the definition of "incentive-based compensation" to be narrowed so that it cannot be misconstrued in implementation or possible enforcement.
NCUA was expected to issue a notice of proposed rulemaking on this very issue at its board meeting last Thursday (see related story).