CURB Act Transfers Executive Pay Authority at Federal Home Loan Banks, Overrides 1992 Safety Provision

The newly introduced Curtailing Unreasonable Remuneration at Banks Act, or the CURB Act, is a short bill focused entirely on changing who gets to set the paychecks for top executives at the Federal Home Loan Banks (FHLBs). If you’ve ever wondered why some bank execs make eye-watering salaries, this bill aims to centralize control over that process, but with a few wrinkles that are worth noting.

The New Boss Sets the Salary

Section 2 of the CURB Act shifts the authority for setting the compensation of FHLB executive officers away from existing structures and hands it directly to “the Director” of the relevant agency. The bill explicitly states that this pay must be “reasonable and comparable,” and the Director will set the rules for determining what those terms actually mean. This move is designed to put a single, accountable figure in charge of preventing executive pay from spiraling out of control at these government-sponsored enterprises.

What 'Reasonable and Comparable' Really Means

This is where things get interesting—and a little vague. The core of this power transfer rests on the Director ensuring compensation is “reasonable and comparable.” As a concept, that sounds great. In practice, without specific metrics defined in the bill, it gives the Director significant discretion. For the average person, this means the effectiveness of this bill hinges entirely on how strictly the Director decides to interpret “reasonable.” Will it mean pay closer to what a government official makes, or will it still allow for multi-million dollar compensation packages if the Director deems them “comparable” to private sector banking salaries? The bill doesn't say, leaving a wide-open door for interpretation.

Overriding the Safety Check

Perhaps the most impactful detail is that the CURB Act explicitly overrides a specific section of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Section 1318(d)). That 1992 provision dealt with some of the existing standards for setting salaries at these institutions. By overriding it, the CURB Act removes an existing statutory check on executive compensation standards. While the new law creates a new check—the Director's authority—it’s important to understand that it’s replacing an established safety standard with a new, more discretionary one. For taxpayers, this is a trade-off: you get centralized oversight, but you lose a previously mandated safety standard related to financial stability and compensation.

The Real-World Impact

For the FHLB executives, this bill could mean a major shake-up. If the Director decides that current pay levels are not reasonable or comparable, their compensation could be capped or reduced. Conversely, if the Director is lenient, executive pay might remain high, now just under a different regulatory umbrella. For the rest of us, the FHLBs play a critical role in providing liquidity to banks and financing for housing and community development. If this new system leads to more stable, sensible compensation, it’s a win for sound financial management. If it leads to regulatory capture where the Director rubber-stamps high pay, the only change is the name on the authorization form.