New Credit Union Rule Pending

Last week, the FDIC was in discussion regarding a proposed new rule for credit union compensation packages.  According to the FDIC summary, the rule “would prohibit a covered financial institution from establishing or maintaining any incentive-based compensation arrangements for covered persons that encourage inappropriate risks by the covered financial institution that could lead to a material financial loss.”  The proposed rule is still awaiting comment, which is subject to a 45-day comment period.  If approved, credit unions with assets of $1 billion or more would have to file an annual report on incentive-based compensation programs.  Credit unions with assets of $10 billion or more would have to meet all those requirements and defer at least 50% of their incentive-based compensation for at least three years and adjust payments based on losses caused by the decisions made.