No changes yet on bank pays
US Federal regulators reviewing the compensation policies of major banks are finding that the industry has not adequately adjusted its pay practices to reduce risk-taking.business Updated: Jun 09, 2010 23:05 IST
US Federal regulators reviewing the compensation policies of major banks are finding that the industry has not adequately adjusted its pay practices to reduce risk-taking.
The Federal Reserve, six months into a compensation review of the country’s 28 largest financial companies, has found that many of the bonus and incentive programmes that economists say contributed to the worst financial crisis since the Great Depression remain in place, according to people briefed on the examinations.
Officials have found risk managers at several banks still report to executives who have influence over their year-end bonuses and whose own pay might be constricted by curbing risk.
In many cases, risk managers do not have full access to the compensation committee of the banks’ boards. The review also revealed that banks tend to set similar bonus formulas for broad sets of employees and often do not adjust payouts to account for risks taken by traders or mortgage lending officers.