In a comment letter to six federal financial regulatory agencies today, ABA raised numerous concerns about the agencies’ proposed incentive-based compensation rule. Mandated by the Dodd-Frank Act, the proposed rule would prohibit incentive-based compensation arrangements for executives that the regulators believe could encourage excessive risk-taking behavior.

The proposed rule would apply to banks with more than $1 billion in assets, dividing banks into three “tiers” based on asset size, with the largest banks subject to the most stringent requirements. Banks with more than $50 billion in assets would be required to defer a percentage of qualifying incentive-based compensation for executives and significant risk takers for a specified amount of time. Regulators would have discretion over requirements for firms with less than $50 billion in assets. Read More