(MENAFN- AFP) Senior executives with large banks would have to wait four years before collecting much of their bonus pay under a proposed regulation in response to the 2008 financial crisis.
The draft rules unveiled Thursday as part of the 2010 Dodd-Frank financial reforms take aim at an incentive system that critics say helped precipitate the crisis by encouraging reckless, bad bets that benefitted companies only in the short-run.
The proposal was accepted by the National Credit Union Administration Board, one of six federal agencies that have been working on the rule. Agencies have set a July 22 deadline for public comment.
The others, including the Federal Reserve and the Securities and Exchange Commission, are expected to take up the rules in the coming weeks. The Obama administration hopes to complete the rule before it leaves office in January 2017.
The toughest requirements fall on "level 1" institutions, the largest banks and non-bank financial institutions which have assets of at least $250 billion. Executives of these firms would have to wait at least four years before collecting at least 60 percent of their incentive-based bonus pay.
The requirements are generally somewhat lighter for employees of Level 2 institutions, which have assets between $50 billion and $250 billion.
The proposal would also subject executives to "clawback" punishments where compensation would be taken back by a firm in cases of employee fraud, misrepresentation or misconduct.
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