WASHINGTON — After four years of interagency wrangling, regulators are close to re-proposing a plan that would set minimum standards for executive compensation for banks and credit unions, Comptroller of the Currency Thomas Curry said Tuesday.

Speaking before an industry conference, Curry said that "improperly structured compensation" was a major contributing cause of the financial crisis, since many firms awarded bonuses and other payments based on executives' returns regardless of the firm's overall financial stability or well-being.

But after the regulators issued a joint proposal in February 2011 that would bar certain performance-based payment structures and require greater disclosure from firms on how executives are compensated, the plan has lingered in limbo in what Curry acknowledged was an "exceedingly long rulemaking process."

The light may be soon at the end of the tunnel, Curry said.

"This is an interagency rule, which is always a bit more difficult to pull off," Curry said following his prepared remarks. "We've made substantial progress, there are a couple of remaining issues that require resolution, but the hope is we can resolve those in short order and proceed with a re-proposal of the original rule."

The delay appears to be due to the sheer number of agencies involved. The proposal is the product of the OCC, Federal Deposit Insurance Corp., Federal Reserve Board, Securities and Exchange Commission, Federal Housing Administration, National Credit Union Administration and Federal Housing Finance Agency.

The banking agencies, in particular, appear anxious to issue and finalize a new proposal. Top officials at the OCC, FDIC and Fed have repeatedly raised the issue, with Fed Gov. Jerome Powell hinting earlier this year that a re-proposal was likely rather than moving forward with a final rule.

Curry said that boards of directors have a responsibility in setting the tone for the rest of the firm to follow, and so the agency guidance — whenever it is repurposed and finalized — should be viewed as a starting point rather than a common denominator for bank culture.

"It's the job of the board, in combination with management, to articulate what the institution stands for—as well as what it does not stand for—and to make clear what is not acceptable behavior," Curry said. "We don't expect directors to manage the bank, but we do expect the board to look at high level issues that relate to culture, from the compensation structure to how management deals with deviations from the standards the board has established."

Martin Pfinsgraff, the Senior Deputy Comptroller of the Currency, voiced similar views earlier in the day at the conference, which was sponsored jointly by the Securities Industry and Financial Markets Association and The Clearing House. Calling the rulemaking process "extremely frustrating," Pfinsgraff said that in the agencies' absence, firms have acted on their own to improve compensation structures since the crisis, implementing plans where pay is returned if wrongdoing is uncovered later.

"We are now approaching four and a half years from when we issued the draft guidance on compensation," Pfinsgraff said. "I would say that the industry has moved very far in that time period, looking at the principles [in the proposal] and operationalized a lot of the deferral mechanisms and clawback mechanisms."

The executive compensation rule has been cited by regulators as the primary means through which the government might influence bank "culture" — a fluid term meant to encompass the excessive risk-taking and apparent disregard for long-term stability that led to the financial crisis. Fed Chair Janet Yellen said in March that supervision alone will not be adequate to address bank culture, but that regulators should focus on ensuring that appropriate compliance regimes are in place to catch bad actors.

But some bankers fear that the regulatory focus on individuals may have an unintended effect.

Speaking on a panel with Pfinsgraff, Gregory Baer, managing director of regulatory policy at JPMorgan Chase, said that much of the operational risk at banks is due to mistakes rather than malfeasance. More executive compensation rules will not prevent those errors, he said. Lehman Brothers, for example, had deferred compensation rules in place when it failed in 2008.

"Clearly that wasn't enough," Baer said. "You can focus too much on the willful wrongdoer, when in fact a lot of the problems that arise are people making mistakes, covering them up, and then doing things wrong."

But Brent Hoyer, the FDIC's deputy director for risk management, responded that financial executives will be more aware of the potential consequences of those mistakes — and executive compensation rules could reinforce that.

"Everybody on the Street knows a friend or has a relative who worked at Lehman [Brothers], or worked at Bear [Stearns] who was wiped out," Hoyer said. "And now, when we have deferrals and clawbacks, it will have meaning. Lehman and Bear became examples of what happens when it goes wrong."

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