Federal Reserve unveils proposal that would police banks' pay policies for the first time
Star Tribune ^ | 10/22/2009 | JEANNINE AVERSA

Posted on Thursday, October 22, 2009 1:05:41 PM by EBH

WASHINGTON - The Federal Reserve for the first time would police banks' pay policies to ensure they don't encourage employees to take reckless gambles like those that contributed to the financial crisis, according to a proposal unveiled Thursday.

Unlike a Treasury plan to slash pay at certain companies that were bailed out with large sums of taxpayer money, the Fed proposal would cover thousands of banks, including many that never received a bailout.

The Fed would not actually set compensation. Instead, the central bank would review — and could veto — pay policies that could cause too much risk-taking by executives, traders or loan officers

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