US Weighs Shaving Bankers' Pay

Reining in pay is good politics, good economics: Krugman

(NEWSER) - Just as the recession wanes and the financial system shows signs of the health, banks are returning to their worst habits, says Paul Krugman. Not only are paychecks soaring to pre-Lehman levels, but the financial sector is using its muscle to block "even the most minimal reforms." While the Fed knows what needs to be done most—"change the industry’s incentives—which means, in particular, changing the way bankers are paid"—President Obama is showing a disturbing lack of backbone, writes the New York Times columnist. More»

Sweeping new rules will let central bank reject risky compensation plans

(NEWSER) - A wide-ranging plan by the Federal Reserve to limit executive pay would allow government regulators to probe private financial institution's pay practices—and let the Fed block any policy it thinks may encourage undue risk. The plan is still being formulated and won't be finished for weeks, but it requires only a board vote and not approval from Congress. For the Wall Street Journal, the compensation plan is the latest show of muscle from an increasingly assertive central bank. More»

FBI, Justice Department investigate timing of bonus payments: source

(NEWSER) - Bank of America's acquisition of Merrill Lynch is the focus of an ongoing investigation by the FBI and Justice Department, sources tell the Charlotte Observer, the bank's hometown paper. The SEC and the AGs of New York and North Carolina have already launched civil probes of the timing of huge bonuses paid to Merrill execs shortly before the deal closed; the feds' involvement indicates that criminal charges may also be in play. More»

(NEWSER) - The judge who has refused to sign off on Bank of America's settlement with the SEC over $3.6 billion in bonuses paid to Merrill Lynch delivered a stinging rebuke to both parties in a hearing yesterday, the New York Times reports. The firms "effectively lied to their shareholders" over the pre-merger bonuses, and the SEC's proposed $33 million settlement seems "strangely askew," said Judge Jed Rakoff. More»

(NEWSER) - The heat is apparently getting to Tim Geithner. At a meeting last week with high-level financial regulators, the treasury secretary indulged in a potty-mouthed diatribe about delays in the administration's highly touted plan to overhaul the regulatory system, declaring, "enough is enough," the Wall Street Journal reports. Attendees included Ben Bernanke, FDIC chair Sheila Bair, and SEC chair Mary Schapiro. More»