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Golden Parachute and Indemnification Payments

Open Date:
Open for comment
Deadline:
All comments are due by
Type:
Final Rule
Number:
RIN-2590-AA72
Group:
 
Fannie Mae; FHLBanks; Freddie Mac; Office of Finance
Document Number:
2018-27564
CFR:
12  CFR Part 1231
CFR Description:
GOLDEN PARACHUTE AND INDEMNIFICATION PAYMENTS
Federal Register Publish Date:
View Document:
 
Contact Information:

FOR FURTHER INFORMATION CONTACT: Alfred Pollard, General Counsel, (202) 649-3050, Alfred.Pollard@fhfa.gov; Lindsay Simmons, Assistant General Counsel, (202) 649-3066, Lindsay.Simmons@fhfa.gov; or Mary Pat Fox, Manager for Compensation, Division of Enterprise Regulation, (202) 649-3215, MaryPat.Fox@fhfa.gov. These are not toll-free numbers. The mailing address is: Federal Housing Finance Agency, 400 Seventh Street, SW, Washington, DC 20219. The telephone number for the Telecommunications Device for the Hearing Impaired is (800) 877-8339.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is amending its golden parachute payments regulation to better align it with areas of FHFA’s supervisory concern and reduce administrative and compliance burdens. This final rule amends a requirement that FHFA review and consent before a regulated entity or the Office of Finance (OF) enters certain agreements to make, or makes, certain payments that are contingent on the termination of an affiliated party, if the regulated entity or the OF is in a troubled condition, in conservatorship or receivership, or insolvent. FHFA’s experience implementing the regulation indicated that it required review of some agreements and payments where there was little risk of excess or abuse, and thus that it was too broad.

As amended, the rule will reduce the number of agreements and payments that are subject to FHFA prior review by focusing on those agreements and payments where there is greater risk of an excessive or abusive payment (in general, payments to and agreements with executive officers, broad-based plans covering large numbers of employees (such as severance plans), and payments made to non-executive-officer employees who may have engaged in certain types of wrongdoing). In addition, the rule as amended clarifies the inquiry into possible employee wrongdoing that a regulated entity is required to undertake prior to entering into an agreement to make or making a golden parachute payment. Amendments also revise and clarify other rule procedures, definitions, and exemptions.

DATES:  Effective Date:  January 22, 2019.

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