Fed Plans to Oversee Bankers' Pay
Sweeping new rules will let central bank reject risky compensation plans
By Jason Farago, Newser Staff
Posted Sep 18, 2009 5:48 AM CDT
Ben Bernanke and Barack Obama during a news conference in Oak Bluffs, Mass., Tuesday, Aug. 25, 2009.   (AP Photo/Alex Brandon)

(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.

The Fed claims it has the legal authority to regulate compensation thanks to its supervisory powers, which let it oversee the financial soundness of banks and other institutions. The proposal is expected to advocate clawbacks of pay to punish overly risky employees, plus remuneration in restricted stock that would only reward long-term performance. But one financial services executive cautioned, "If the restrictions on income-producers or salespeople are too draconian, it will actually undermine the strength of the institutions."

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Guest
Sep 20, 2009 12:18 AM CDT
the fed is a fraud! the fed is not a government agency! the fed is corrupt, from the top all the way down! do the research and you will see for yourself. the fed is the bottom line cause of this current economic melt down. New World Order=Socialism for every one! Now that IS change you can believe in!
Altoecko
Sep 18, 2009 5:55 AM CDT
I think that's a little too much power to the Fed.