WASHINGTON (AP) - The Federal Reserve is proposing for the first time to police banks' pay policies to ensure they don't encourage employees to take reckless gambles like those that contributed to the financial crisis.
Unlike a Treasury plan to slash pay at certain companies that were bailed out with large sums of taxpayer money, the Fed proposal would cover thousands of banks, including many that never received a bailout.
The Fed would not actually set compensation. Instead, the central bank would review - and could veto - pay policies that could cause too much risk-taking by executives, traders or loan officers.
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