Fed wants early pay curbs
THE FEDERAL RESERVE got tough with US banks over pay yesterday, telling them to curb bonuses this year, even though stricter rules do not come into force until 2010.
In half-hour meetings at regional offices held across the country, the Fed told bank bosses it expected them to follow the broad principles of the new rules – aligning compensation with risk and avoiding pay structures that foster short-term decisions by traders – for pay covering 2009.
John Mack, chairman of Morgan Stanley and Vikram Pandit, Citigroup’s chief executive, attended a meeting in New York, as did senior executives from Goldman Sachs, JPMorgan Chase and Bank of New York Mellon.
The Fed wants to change Wall Street’s pay practices ahead of a public backlash against what is set to be a big bonus season at America’s banks.