Request for Emergency Clearance

FDII

Federal Deposit Insurance Corporation
Legal Division

550 17th Street NW, Washington, D.C. 20429-9990

June 21,2010

Ms. Shagufta Ahmed
OMB Desk Offcer
Offce of Management and Budget
New Executive Offce Building
Washington, DC 20503
Dear Ms. Ahmed:

Management and Budget (OMB) regulations at 5 C.F.R.
§ 1320.13, the FDIC requests an OMB emergency review and approval by 9:00 a.m. on June 21,
2010, for the attached information collection titled "Sound Incentive Compensation Guidance."

Pursuant to the Offce of

The FDIC has determined that:

(1) The collection of information is needed prior to the time period established under 5
C.F.R. Part 1320;

(2) The collection of information is essential to the mission of the agency; and
(3) The FDIC cannot reasonably comply with normal clearance procedures under 5
C.F .R. Part 1320 because public harm is reasonably likely to result if normal clearance
the
procedures are followed. The FDIC only recently determined to join in issuance of
guidance, preventing it from following normal clearance procedures. Moreover,
immediate clearance will serve the public by ensuring the prompt improvement of
incentive compensation practices in the financial services industry.
Incentive compensation practices in the financial services industry contributed to the financial
crisis that began in 2007. Financial institution employees too often were rewarded for increasing
short-term revenue or profit without adequate regard to the risks taken to achieve those results.
These practices exacerbated the risks and losses at a number of financial institutions and resulted
the interests of employees with the long-term safety and soundness of
in the misalignment of
their financial institutions. It is urgent that incentive compensation practices be brought under
control through supervisory action. This incentive compensation guidance will promote the
prompt improvement of incentive compensation practices in the financial institution industry.

the Federal Reserve System (FRB) issued the guidance in proposed
form on October 27,2009 (74 FR 55227) and is now prepared to issue it in final form. The FRB

The Board of

invited the Offce of

Governors of

the Comptroller ofthe Currency (OCC) to join in the issuance of

the final

guidance so that the guidance would also apply to OCC-supervised banks as well as to the bank

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holding companies supervised by the FRB. Likewise, the FRB invited the Office of Thrift
the final guidance so that the guidance would also
Supervision (OTS) to join in the issuance of
apply to OTS supervised financial institutions. Both the OCC and OTS sought, and were
granted, emergency OMB approvaL.

By joining the FRB, OCC, and OTS, in issuing the Guidance jointly, the FDIC believes the
supervisory expectations for banking organizations would be strengthened and the opportunity
for regulatory arbitrage in compensation practices at the bank level would be diminished.
Therefore, the FDIC requests an emergency approval of
immediate collection of

this information is in the best interests of

this collection. The FDIC believes that
the United States, thrift

financial institutions, and the public.

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Very truly yours,

Valerie J. Best
Supervisory Counsel
(Assistant Executive Secretary)