TALKING -JUST- COMPENSATION?
Mack, Dimon Said to Meet New York Fed on Compensation
Nov. 2 -- Wall Street’s top bankers met New York Federal Reserve President William Dudley at his headquarters today to hear they must follow the Fed’s new rules on executive compensation, people familiar with the matter said.
John Mack, Jamie Dimon and Lloyd Blankfein, the chief executive officers of Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. met Dudley for about 20 minutes, the people said, speaking anonymously because the meetings were private. The three came with the heads of their compensation committees, C. Robert Kidder, Lee Raymond and James Johnson, the people said.
The Fed said last month it will review the 28 largest banks to ensure compensation doesn’t create incentives for the kinds of risky investments that brought the global financial system to the edge of collapse, prompting bailouts of firms including Bank of America Corp. and Citigroup Inc. It also offered guidelines on making pay more tied to risk management.
Fed officials described and clarified the guidelines in the meetings, the people said. They indicated that the Fed’s efforts would be in coordination with other regulatory bodies, including the U.K.’s Financial Services Authority, one of the people said. Deborah Kilroe, a spokeswoman for the New York Fed, declined to comment.
Sending a Message
By calling in chief executives, “they want the message to be heard loudly and clearly that they mean business,” said Gilbert Schwartz, former associate general counsel at the Fed Board and now a partner at Schwartz & Ballen LLP in Washington. “It was intended to have an impact.”
Fed Governor Daniel Tarullo is leading an overhaul of the central bank’s supervision and is making greater use of firm-by- firm comparisons and the Fed Board’s research economists to help supervisors identify risks.
Tarullo, who is President Barack Obama’s first appointment to the Fed, said in a speech on pay in Washington today that Fed guidelines may change and that public scrutiny of compensation has never been “more intense.”
The central bank’s action parallels efforts by U.S. lawmakers, the Obama administration and world leaders to overhaul incentives usually set by corporate boards and reduce threats to the financial system.
Banks worldwide have taken more than $1.6 trillion in credit losses and writedowns since the financial crisis began around August 2007, according to data compiled by Bloomberg.
While the Fed’s proposed guidelines will apply to banks it supervises across the nation, the largest firms will have to describe plans to bring their practices into alignment. The central bank may take enforcement action against banks where compensation or risk-management practices threaten “safety and soundness” and no prompt measures are taken to address them, according to the Fed’s proposed guidance.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aae9_BkkCmdg
Bank Nationalization ... Here we go ...
Mack, Dimon Said to Meet New York Fed on Compensation
Nov. 2 -- Wall Street’s top bankers met New York Federal Reserve President William Dudley at his headquarters today to hear they must follow the Fed’s new rules on executive compensation, people familiar with the matter said.
John Mack, Jamie Dimon and Lloyd Blankfein, the chief executive officers of Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. met Dudley for about 20 minutes, the people said, speaking anonymously because the meetings were private. The three came with the heads of their compensation committees, C. Robert Kidder, Lee Raymond and James Johnson, the people said.
The Fed said last month it will review the 28 largest banks to ensure compensation doesn’t create incentives for the kinds of risky investments that brought the global financial system to the edge of collapse, prompting bailouts of firms including Bank of America Corp. and Citigroup Inc. It also offered guidelines on making pay more tied to risk management.
Fed officials described and clarified the guidelines in the meetings, the people said. They indicated that the Fed’s efforts would be in coordination with other regulatory bodies, including the U.K.’s Financial Services Authority, one of the people said. Deborah Kilroe, a spokeswoman for the New York Fed, declined to comment.
Sending a Message
By calling in chief executives, “they want the message to be heard loudly and clearly that they mean business,” said Gilbert Schwartz, former associate general counsel at the Fed Board and now a partner at Schwartz & Ballen LLP in Washington. “It was intended to have an impact.”
Fed Governor Daniel Tarullo is leading an overhaul of the central bank’s supervision and is making greater use of firm-by- firm comparisons and the Fed Board’s research economists to help supervisors identify risks.
Tarullo, who is President Barack Obama’s first appointment to the Fed, said in a speech on pay in Washington today that Fed guidelines may change and that public scrutiny of compensation has never been “more intense.”
The central bank’s action parallels efforts by U.S. lawmakers, the Obama administration and world leaders to overhaul incentives usually set by corporate boards and reduce threats to the financial system.
Banks worldwide have taken more than $1.6 trillion in credit losses and writedowns since the financial crisis began around August 2007, according to data compiled by Bloomberg.
While the Fed’s proposed guidelines will apply to banks it supervises across the nation, the largest firms will have to describe plans to bring their practices into alignment. The central bank may take enforcement action against banks where compensation or risk-management practices threaten “safety and soundness” and no prompt measures are taken to address them, according to the Fed’s proposed guidance.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aae9_BkkCmdg
Bank Nationalization ... Here we go ...
