WASHINGTON — The Federal Reserve is preparing what would be the most sweeping rules yet to regulate the pay at banks across the country, people close to the discussion said on Friday.
The rules would apply not just to the pay and bonuses of top executives but also to traders, loan officers and other employees. But rather than focusing on the specific amount employees are paid, Fed officials will be scrutinizing whether the structure of compensation, like the use of bonuses based on the volume of loan origination, encourages excessive risk-taking.
The proposed rules were reported on Friday by The Wall Street Journal.
The rules are not expected to be ready for several weeks. But the central bank is expected to invoke its authority as a regulator monitoring the safety of the banking system and soundness of banks’ decisions.
The surprising move comes as both the Obama administration and the Congress, as well as governments in other industrialized countries, are pushing for restrictions on executive pay, which many experts have cited as a contributor to the reckless risk-taking and the financial crisis of the last two years.
The Treasury Department already has a team led by Kenneth Feinberg that is examining the pay packages at banks that received money under its $700 billion bailout program. Congress is pushing for broader regulations that would apply to all financial institutions.
No comments:
Post a Comment