We told you about the impending TARP executive compensation rules yesterday. The Fed is not so coincidentally proposing its own set of rules, and, as is increasingly common with that agency, there's a big-bank/small-bank distinction drawn in the mechanism of oversight. With Basel II, that was a move thought to benefit big banks, but it looks - though the proof is in the pudding - like the compensation review proposed today is more onerous for large institution, though it is designed in a way that looks a bit like government-sponsored cartellization (which might be good for large institutions looking to cap the pay of their employees, etc). Anyway, there are two proposals:
Second, supervisors will review compensation practices at regional, community, and other banking organizations not classified as large and complex as part of the regular, risk-focused examination process. These reviews will be tailored to take account of the size, complexity, and other characteristics of the banking organization.
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