The Federal Housing Finance Agency announced Tuesday its new proposed rule which would amend its rule on golden parachute payments in order to reduce compliance burdens.

Currently, the rule on golden parachute payments, requires the FHFA to review and consent before any entity regulated by the Office of Finance enters into an agreement to make or makes the payment to the terminated executive if the company is in a troubled condition, in conservatorship or receivership or insolvent.

For these companies, under the Federal Housing Enterprises Financial Safety and Soundness Act, the FHFA has broad discretionary authority to prohibit or limit any golden parachute payment, any payment or agreement to make a payment by a regulated entity for the benefit of an affiliated party that is contingent on the party’s termination.

The rule was originally enacted in order to permit the FHFA to prevent payments to departing employees and other affiliated parties that are excessive or abusive, could threaten, or further threaten, the financial condition of the troubled institution or are inappropriate based on wrongdoing by the recipient.

But the FHFA explained some parts of the rule are too broad, and overregulate areas where there is little risk of excess or abuse.

The current rule prohibits all golden parachute payments and agreements that are not exempt from or permitted by the rule. Prohibited agreements or payments may be permitted by the FHFA director after review.

Because the rule applies equally to golden parachute payments and agreements, it requires FHFA to determine the permissibility of prohibited agreements before they are entered into and of prohibited payments before they are made. In most cases, this means that a troubled institution must request FHFA’s prior review and consent to a payment that would be made in accordance with an agreement to which FHFA has already consented.

The new proposal suggests focusing on types of agreements and payments that are of greater supervisory concern, according to the FHFA.

These types of payments would include those to executive officers, broad-based plans covering large numbers of employees such as severance plans and payments made to non-executive officer employees who engaged in wrongdoing.

The proposed amendments would also revise and clarify definitions, exemptions and procedures to implement FHFA's supervisory approach, the agency explained. It would also align procedures and outcomes of review under the Golden Parachute Payment Rule with requirements of FHFA's rule on executive compensation.

The FHFA expects the amendments to result in reduced administrative and compliance burdens, and is now requesting feedback from the housing finance industry. Comments can be submitted here by October 12, 2018.