FDIC is expected to hold preliminary discussions with top banking watchdogs such as the Federal Reserve and the Securities and Exchange Commission. The proposals are likely to target specific structures that are deemed to increase or reduce risk.
Bankers’ pay has been a controversial issue as the US government pumped taxpayers’ money to bail out some of the nation’s biggest financial institutions. Against this backdrop, the regulators intend to assess banks’ pay policies that have been facing severe criticism for encouraging risk-taking and helping to kick start the global financial turmoil.
The FDIC’s initiative aims to provide banks with an incentive to align their pay structures with the regulators’ wishes and penalties if they fail. It also has the potential to affect a larger number of banks as most of the nation’s lenders have to pay the FDIC levy.
