In an attempt to prevent banks and other financial institutions from the excessively risky practices that led to the financial crisis and Great Recession, financial industry regulators are seeking comment on a proposed rule that would implement Section 956 of the Dodd-Frank Act and change compensation structures and align banks’ incentives.
The new proposed rule is a revision of a rule that was proposed in April 2011 and is developed jointly by six federal regulatory agencies. Section 956 of the Dodd-Frank Act requires that federal regulating agencies jointly issue guidelines, quote, prohibiting incentive-based payment arrangements that the Agencies determine encourage inappropriate risks by certain financial institutions by providing excessive compensation or that could lead to material financial loss. Close quote
Now that his bill proposing a measure of CFPB reform has passed the House Financial Services Committee, Representative Andy Barr, a Republican from Kentucky, said the next step is for House Majority Leader Kevin McCarthy, a Republican from California, to schedule the bill for the House floor. Barr’s bill, known as the Taking Account of Bureaucrats’ Spending Act of 2015, passed in the Committee earlier in April by a vote of 33 to 20. The TABS Act aims to make the CFPB more accountable to taxpayers and ensures effective oversight of the Bureau by Congress.