Fed's Powell says Wall Street revamping bonus plans that reward undue risk-taking

19 July 2018 12:42am
The biggest banks have been reshaping their bonus plans under US Federal Reserve pressure to avoid encouraging inordinate risk-taking by executives and traders, Fed chief Jerome Powell said.

The Fed’s oversight push is helping to accomplish what was intended by a Dodd-Frank Act rule proposal that’s never been adopted, he told the Senate Banking Committee.

“For the largest institutions, we do expect that they will have in place compensation plans that do not provide incentives for excessive risk-taking,” Powell said Tuesday. “We expect that the board of directors will make sure that that’s the case.”

“We moved ahead through supervisory practice to make sure that these things are better than they were, and they’re substantially better than they were," he said. Big banks, Powell said, were “where the problem really was.”