Fed seeks to police pay on banks that reward risk Read more: http://www.nydailynews.com/money/2009/09/19/2009-09-19_fed_seeks_to_police_pay_on_banks_

Entering uncharted waters, the Fed is drafting a plan in which it would police banks' pay policies to make sure they don't encourage excessive risk-taking.

The proposal is the Fed's latest response to criticism that it failed to crack down on lax lending, reckless gambles and other practices that led to the nation's financial crisis.

The central bank's more activist stance carries a risk, though: It could intensify accusations from lawmakers and other critics that the Fed is overstepping its bounds and should be reined in.

The Fed would not actually set compensation, but the proposal is far-reaching: Officials would review salaries, bonuses and other compensation for CEOs and senior management and could reject those pay plans, people with knowledge of the proposal said. It also would cover certain employees, such as traders, who can take big risks on behalf of a firm, they said.

Read more: http://www.nydailynews.com/money/2009/09/19/2009-09-19_fed_seeks_to_police_pay_on_banks_that_reward_risk.html#ixzz0RdgmYhR7

Posted in: Business-Economic,World News