John Podvin in Will the New Rules on Compensation Risk Really Help?


Following up on Bank Director’s Bank Executive & Board Compensation conference last week, we asked attorneys for their opinions on the latest rules on compensation risk and whether they really found them necessary or helpful. In a word? No. Although the exact impact remains to be seen, many feel that these new rules will actually hurt more than they help.

Will the new federal rules on compensation risk make the banking industry safer?...

The interagency rules implementing Section 956 of Dodd-Frank limiting compensation in banks larger than $1 billion in assets are not finalized yet. It remains to be seen whether these rules will change the product mix offered by banks going forward under the guise of restricting compensation. It also remains to be seen whether there will be “trickle-down” of these rules to banks with assets of less than $1 billion. Another unintended consequence might be if the rules restrict compensation to an extent that some of the best and brightest minds leave the banking industry for greener pastures. Does that actually make the banking industry safer? —John Podvin, Haynes and Boone, LLP

Excerpted from, November 13, 2012. To view full article, click here.

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