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TUESDAY, NOVEMBER 24, 2009
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11

Fed Rolls Out Plan to Limit Bank Pay

It works in tandem with pay czar's new compensation rules

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(Newser) – The Federal Reserve today officially announced a plan to regulate pay structures at banks, the same day the pay czar rolled out his plan to cap salaries at bailed-out firms. The administration’s double-whammy on compensation marks an unprecedented level of government involvement in the private sector, and the policies that result may be the most enduring legacy of the financial crisis, notes the Wall Street Journal.

The Fed’s plan will create two pay regulation systems, one for the nation's 28 largest bank holding companies and another for thousands of regional and community banks. Within that system, each bank’s compensation rules are likely to be tailored to the institution with the goal of discouraging employees from taking risks for short-term gain. The review of pay structures, and negotiations with regulators will be confidential.

In this Oct. 1, 2009, file photo, Federal Reserve Board Chairman Ben Bernanke testifies on Capitol Hill.
In this Oct. 1, 2009, file photo, Federal Reserve Board Chairman Ben Bernanke testifies on Capitol Hill.   (AP Photo/Evan Vucci, file)
This Aug. 15, 2007, file photo shows Kenneth R. Feinberg at his office in Washington.
This Aug. 15, 2007, file photo shows Kenneth R. Feinberg at his office in Washington.   (AP Photo/Charles Dharapak, File)
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There's definitely never been anything like this where a government sets pay for a company that's publicly traded.
- JW Verret, professor, George Mason University School of Law

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11 comments
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UseReason
Oct 22, 09 5:31 PM CDT
Who is John Galt? Reply
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Altoecko
Oct 22, 09 11:11 PM CDT
An Imaginary symbol of a man who lived in an impossible society whom you seem to think for some reason represents the common man's interest.
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cornelison
Oct 22, 09 5:35 PM CDT
What about the bonuses? These executives have an army of lawyers. Is t possible that they might be meeting this week to look for loopholes? Reply
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Jayster999
Oct 22, 09 5:36 PM CDT
Maybe the Fed should limit the pay of their share-holders. Reply
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Enoughie
Oct 22, 09 6:22 PM CDT
Why so socialist? Reply
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