Fed Considers Limits on Bank Pay

[pampango]

Source: New York Times

WASHINGTON — The Federal Reserve is preparing what would be the most sweeping rules yet to regulate the pay at banks across the country, people close to the discussion said on Friday.

The surprising move comes as both the Obama administration and the Congress, as well as governments in other industrialized countries, are pushing for restrictions on executive pay, which many experts have cited as a contributor to the reckless risk-taking and the financial crisis of the last two years.

The rules would apply not just to the pay and bonuses of top executives but also to traders, loan officers and other employees. But rather than focusing on the specific amount employees are paid, Fed officials will be scrutinizing whether the structure of compensation, like the use of bonuses based on the volume of loan origination, encourages excessive risk-taking.

Read more: http://www.nytimes.com/2009/09/19/business/economy/19pay.html?ref=global-home

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Wonder how this compares to the compensation limitations being discussed in Europe.

[pleah]

1. Just considering? Well, as long as they're considering

limits on pay....:eyes:

I just wish they would actually do something instead of taking weeks, months and years to get something done.

K&R

[CoffeeCat]

2. I disagree with this...

The government should not be dictating salaries of anyone. Yes, many executives
have excessive salaries, but how would the government decide what those salaries should
be--and why would they start and stop with only banking? Seems arbitrary and completely
out of bounds for the Federal government.

Besides, executives would find a way around it. If their salaries were cut, they would work
out some bonus or other compensation package.

If you want to make real change--change the tax rates for these upper-income people. Make
them pay their fair share of taxes. How about starting with that?

[JDPriestly]

4. They should tax incomes over a certain amount at a very high rate.

That's the way it was under Eisenhower.

[pampango]

7. Exactly. Pay them as much as you want as long as we get most of it in tax receipts. n/t

[Wizard777]

3. Trimming all that fat at the top could cut there need to engage in Fee robberies.

Like charging us money to get back the money we trusted them to hold for us. I would love to see a CEO being told he has to pay the bank 6% to get his paycheck cashed. Because the bank is now a check cashing service. But it's written off this bank. Yes that allows the account holder to write the checks. But that doesn't allow you cash them. So the account holder has defrauded me with a bad check? No we can cash it. You just have to give us 6% to do that. Isn't the account holder paying you? Yes but now it's your turn to pay us. I would suggest you hurry. Because I have to fart. If I fart while processing your check. That's an additional 2%. We really can do ANYTHING for free. If you ask me anymore questions I'm going to have to charge you a consultation fee. I'm also going to have ask you to quit breathing our air. There is a fee for that too.

:sarcasm: and hyperbole. But not by much.

[JDPriestly]

5. Charging us to get back the money we trusted them to hold us.

Our banks have charged us in two ways:

1) they extorted tax money from Congress-- money that could have been used for better purposes like funding health care insurance reform, cleaning up the air, grants for scientific research, many, many things

2) while charging exorbitantly high interest rates on the credit cards of people who are having financial difficulties (just like the banks themselves), the pay interest rates on deposits that are next to nothing. One bank offered an elderly woman I know 3.9% on deposits for 42 months. Meanwhile, the dollar is dropping rapidly. That means that the elderly woman's dollars in the bank are losing their purchasing power. Since we import everything, that means she will not be able to buy as much of those imported goods in 42 months as she can now. If inflation of the dollar grows fast enough, she could lose quite a bit of her money in those 42 months. 3.9% interest isn't as bad as the 0.5% interest on certain other deposits, but it is a lot less than the 30% being charged some credit card customers on their debts.

The banks have conducted themselves in an irresponsible manner. I wish we could just vote the management out.

[Wizard777]

6. That's because the banks can participate in our elections. But we can't participate in theirs.

To participate in their elections you own stock. You get one vote for each share. I think Sotomayor should put that to the corporations. Shouldn't the US conduct their elections like corporations conduct theirs. If you do not have a vote. You cannot participate.

[aquart]

8. Oh, what a VERY good point.

We don't permit foreign money on that principle, right?

So the question is not, are corporations people, but are corporations CITIZENS OF THE UNITED STATES?

[JDPriestly]

9. Can corporations register to vote? That's the key.

If you can't register to vote, you should not be able to donate to political candidates or even campaigns about political causes.