Fed Said to Press Largest Banks to Lower Pay Incentives for Risk

This article is about the reaction of the Fed towards banks who compensate executives and employees based on short term, risk taking strategies. The Fed reviewed five large banks and came up with a set of guidelines that based pay on more long term incentives rather than risky investments. The big concern is that these banks' board of directors are not monitoring compensation enough. The Fed proposes a series of tests for pay-related risks for each bank. This year, there are many CEOs who are either foregoing salary, foregoing bonuses, or both. I think this is a great idea to promote trust in the integrity of the banking sector again. Also, the biggest problem here seems to be that the former compensation system promotes greed so much that employees are willing to risk hurting the company for their own gain.