Fed Mulling Pay Rules For Top, Midlevel Bank Execs

September 18, 2009 4:26 p.m. EST

Washington, D.C. (AHN) - The Federal Reserve is studying ways to regulate pay of top bank executives, according to media reports on Friday.

The focus of the rules would be on whether the pay structure encourages bank officials to take excessive risk. In addition to restricting pay of top executives, the Fed would look at the compensation and bonuses for loan officers and other employees.

The Fed plan is reported to be different from that of the Treasury Department. That agency is looking at pay packages for banks that received federal bailout money. The Fed would consider setting up a two-tier system of supervising, with the nation's two dozen largest banks getting the major scrutiny.

The Fed program would examine pay for mid-level traders, mortgage loan officers and office managers whose pay was tied to generated revenue at about 5,000 bank holding companies and state-chartered banks. It would not set an upper limit on pay, but look to see if pay policies encouraged high-risk financial behavior.