Dodd-Frank Interagency Rule: What Does It Mean for Credit Unions?
Wall Street reform may be what the Dodd-Frank Act is intended to accomplish, but as usual, those financial institutions that followed the rules and operated with the best interests of their customers in mind end up shouldering a new burden because of a bunch of bad actors who didn’t.
The Office of the Comptroller of the Currency, the Federal Reserve, the FDIC, the Office of Thrift Supervision , the SEC, the FHFA and the NCUA have jointly prescribed an interagency rule to implement Section 956 of Dodd-Frank.
The goal of the interagency rule is to reward executives of financial entities for sustainable growth, not the short-term blips that don’t benefit anyone in the long run. Essentially, the rule said that credit unions should operate in the best interests of their members over the long term. Why should we even need a rule to tell us that?
The promulgation of these new rules may signal a need to rethink our assumptions about executive compensation. Instead of the view that CEOs are driven more by money than by the good of the organization and their own feelings of accomplishment, an incentive payment should be the reward that comes after the fact for doing one’s job up to or better than expectations. People are motivated by values and rewarded with money.