As required by the Dodd-Frank Act, the Board of the National Credit Union Administration, or NCUA, voted to approve a draft interagency proposed rule establishing general requirements for incentive-based compensation arrangements for “covered” financial institutions. Dodd-Frank requires the NCUA, Federal Reserve, FDIC, Federal Housing Finance Agency, OCC, OTS, and SEC to jointly prescribe regulations or guidelines with respect to incentive-based compensation practices at financial institutions with total assets of $1 billion or more.

In another action required by the Dodd-Frank Act, the NCUA Board issued proposed rules to remove references to nationally recognized statistical rating organization, or NRSRO, credit ratings in NCUA regulations and to substitute other standards of credit worthiness. The proposed amendments would replace NRSRO ratings with either narrative standards or a credit union’s own internal standard. Under the proposal, credit unions would be required to explain how the securities it purchases or counterparties with which it does business meet the applicable standards. Credit unions would be required to develop, maintain and apply criteria for assessing the creditworthiness of securities and counterparties.

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