"Such a rule could encourage a revolving door of senior executives and directors seeking to avoid recoupment, a situation that would undermine, rather than promote, stability," the groups wrote in the May 23 letter, which was signed by executives from the Financial Services Roundtable, Securities Industry and Financial Markets Association, American Bankers Association and The Clearing House Association.
The agency, in changes to the initial proposal released in March, clarified that an executive or director would be considered substantially responsible if there was a failure to conduct their responsibilities "with the degree of skill and care an ordinarily prudent person in a like position would exercise under similar circumstances."
Acting Comptroller of the Currency John Walsh, who had voiced apprehension about the executive compensation piece of the proposal in March, called the clarifications a "good change."
Living Wills
Bair said another part of the FDIC's Dodd-Frank responsibilities would likely be completed in August. Along with the Federal Reserve it has been crafting a proposal designed to guide banks and other large firms in writing so-called living wills -- plans that would enable them to be unwound in an orderly fashion if they failed. Bair had been pushing to finish the task before she left office.
Under the living-will rules, companies with at least $50 billion in assets will be required to provide information on debt, funding, capital and cash flows. Firms that fail to file workable resolution plans could be subject to increased capital, leverage or liquidity requirements, and restrictions on growth or operations.
"Clarity is important and with respect to the resolution plans, the sooner the agencies can articulate what the procedural and substantive requirements are for resolution plan activity, the better off we're all going to be," said Thomas Curry, an FDIC director and President Barack Obama's nominee to be the next Comptroller of the Currency.