Under a new proposal set to be released soon, the Federal Reserve will give itself the authority to reject compensation on CEOs, traders, and loan officers that it feels takes on too much risk. More than 5,000 bank holding companies will be affected by this proposal, including hundreds of small, state-charted institutions. About 25 of the U.S.’s largest banks would receive even closer scrutiny.
As the Wall Street Journal describes it,
The Fed’s latest move marks another striking exertion of power by the nation’s central bank since the financial crisis struck with ferocity two years ago. It has bailed out firms such as American International Group Inc. and has flooded the financial system with money.
Ironically, this move comes at a time when an overwhelming majority want to audit and restrict the powers of the Federal Reserve.
The Federal Reserve board will consider this proposal within the coming weeks. They claim that if it is approved, they will open it up for “public comment”, however, I think what they mean is the Fed will make a comment about it in public.
Sources: The Wall Street Journal