While much of the world focuses on moves to restrain compensation practices at large TARP-financed institutions, the Federal Reserve on October 22 issued proposed "supervisory guidance" for bankers' pay which will have far more wide-ranging effects. Once finalized, the guidance will apply not just to an unlucky handful of senior executives at high-profile firms, but to thousands of Fed-regulated banking institutions, including some 3,000 characterized by the Fed as "small banking organizations."
Although the Fed anticipates finalizing the rules by the end of the year, it has been made clear that they expect banks to begin reviewing their compensation practices immediately. On November 2, they held a series of calls with top management of the 28 largest banks to communicate "our plans and expectations," including a requirement that they provide information regarding current practices by next February.
The Fed's move is one of a number of initiatives underway in the US and abroad.
This article is only available in full to Complinet Complete North America Subscribers who are logged in.
Please log in to see if you can view this content.
