Pay policies, bank risk and FDIC insurance

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If executive compensation policies are truly a risk factor for financial institutions, then it makes sense that such policies should be considered by the FDIC when it assesses fees to be paid to its insurance fund. If risk policies are going to make it more likely that a bank will need to tap the fund, why not charge them more? The FDIC may be coming around to this view.

The Financial Times reports that the board of the FDIC, which comprises top banking regulators, will discuss the issue perhaps when it meets next Tuesday. One issue is whether there are now enough pay regulations that FDIC action is not really necessary. One  danger is that the FDIC angers the banking community even more; many have agreed to accelerated fund payments already. It does not want a public backlash now. 

For more:
- here's the article

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