Making banks pay
In return for the FDIC insuring bank deposits, banks are assessed a regular fee. It's a lot like paying for insurance, actually. And in what seems like a sensible move, the FDIC wants banks engaging in risky behavior to pay a bit more:
The FDIC, which collects fees from all banks to repay depositors in failed banks, is considering a plan to impose higher fees on banks with compensation practices that the agency regards as encouraging reckless pursuit of short-term profits without sufficient regard for the risk of long-term losses. [...]
The proposal would push companies to compensate employees with awards of deferred stock -- shares that they cannot sell immediately. The FDIC also wants companies to include "clawback" provisions requiring employees to repay bonuses if short-term gains curdle into long-term losses. Finally, the FDIC wants pay decisions made by independent members of a company's board of directors.
Alongside news that the White House is considering a new tax or fee on banks, we might be seeing the beginning of the administration's effort to show they're not soft on the banks.
January 13, 2010; 8:05 AM ET
Categories: Financial Regulation
Save & Share: Previous: What a difference a black president makes
Next: What happens to health-care reform if Martha Coakley loses?
Posted by: zeppelin003 | January 13, 2010 9:47 AM | Report abuse
Posted by: scott1959 | January 13, 2010 10:55 AM | Report abuse
The comments to this entry are closed.