Banks Should Base Worker Bonuses On Risk-Taking: Fed

Law360, New York (October 5, 2011, 5:35 PM EDT) -- Big banks need to more closely tie employee compensation to how risky an employee's actions are, the Federal Reserve said in a report released Wednesday.

Deferring or adjusting bonuses based on risk-taking and more accurately identifying key employees whose decisions can have damaging ripple effects are among the report's recommendations, in the latest move by regulators to tackle what they view as systemic risk in the wake of the 2008 financial meltdown.

“Incentive compensation arrangements should balance risk and financial results in a manner that does...
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