Today, on the same day that the administration’s special master for compensation placed significant pay restrictions on the seven companies under his watch, the Federal Reserve released new guidelines regarding compensation practices at all banking organizations.

“Compensation practices at some banking organizations have led to misaligned incentives and excessive risk-taking, contributing to bank losses and financial instability,” said Federal Reserve chairman Ben Bernanke. “The Federal Reserve is working to ensure that compensation packages appropriately tie rewards to longer-term performance and do not create undue risk for the firm or the financial system.” According to the Fed, compensation practices should:

- Provide employees incentives that do not encourage excessive risk-taking beyond the organization’s ability to effectively identify and manage risk;

- Be compatible with effective controls and risk management; and

- Be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.

The guidelines apply to all banks, including regional and community banks, but the Fed will give special scrutiny (and require detailed descriptions of current practices) to 28 “large, complex banking organizations.”

The New York Times noted that the Fed’s principles “are less strict than plans suggested by some European leaders and some members of Congress. They do not impose caps on pay or prohibit multimillion dollar pay packages.” But more than that, they are simply devoid of specifics, and have no teeth behind them. So long as the banks make an attempt to conform with the principles above, it seems like the Fed will be willing to give them a pass.

Remember, as of late the Fed has been scrambling to issue various sets of guidelines, in an attempt to prove it’s taking regulatory reform seriously, as Democrats in Congress advance legislation stripping the Fed of some of its regulatory functions. This could easily be about symbolism, with little intention of following through on the substance.

One interesting aspect of the proposal, though, is that the Fed is soliciting comments on whether “formulaic limits [for compensation] be adopted for some or all banking organizations”:

[Some] have suggested consideration of an approach in which at least 60 percent of all incentive compensation received by senior executives of all large, complex banking organizations be deferred and at least 50 percent of incentive compensation be paid in the form of stock, options, or other equity-linked instruments. Would such formulaic limits on determining and paying incentive compensation likely promote the long-term safety and soundness of banking organizations generally if applied to certain types or classes of executive or nonexecutive employees across all or certain types of banking organizations?

I think the answer is undeniably yes, deferring payment is a smart move, so that pay is linked to the longer-term health of a firm (assuming the length of deferment is long enough to accurately determine how well a banker’s bets are paying off). And if a formula is indeed adopted, the Fed’s proposal will suddenly look a lot better.

For months, ThinkProgess has documented how the private health insurance industry has waged a duplicitous, “two-faced” campaign to kill health reform. Because the industry understands that the public views it in a largely negative light, the industry presents itself as proactively working hand-in-hand with legislators to produce reform. However, behind the scenes — using attacks from front groups, allied politicians, think tanks, lobbyists, and right-wing media — the industry is coordinating a massive effort to kill all reform.

As Congress approaches a final vote on health reform, the industry is having difficulty concealing its underhanded campaign. USA Today reports that Karen Ignagni, the President of the insurance industry trade group AHIP, fired off a letter reminding Democrats that despite releasing a deeply misleading report last week slashing the Senate Finance health bill, her companies are still “committed to bipartisan health reform”:

“You don’t turn against reform simply because people have declared you’ve turned against reform. That’s not what we’re doing.“

The self-conscious letter stands in stark contract with what Ignagni’s own lobbyists said today at an AHIP conference. According to the Huffington Post, Steve Champlin, a lobbyist for a firm representing AHIP, declared bipartisan health reform dead and urged GOP lawmakers to refuse to help pass a bill:

“There is absolutely no interest, no reason Republicans should ever vote for this thing. They have gone from a party that got killed 11 months ago to a party that is rising today. And they are rising up on the turmoil of health care [...] So when they vote for a health care reform bill, whatever it is, they are giving comfort to the enemy who is down.”

Private insurers have already been caught using a stealth lobbying firm to send employees to rowdy town halls (and radical tea party events), sharing lobbyists with slash-and-burn anti-health reform attack groups, and paying a number of conservative pundits who regularly appear in major media outlets to slam health reform. Almost immediately after AHIP issued its “hatchet job” report against the Senate Finance bill, Republican lawmakers began parroting the report’s talking points verbatim. The candid slip by Champlin today, whose firm has been paid hundreds of thousands by AHIP, underscores a larger effort by insurers to derail reform, even bills without robust measures like the public option.

Click here for ThinkProgress’ research page on the health insurers’ campaign against reform.

Today, Kenneth Feinberg, the administration’s special master for compensation, plans to announce that the seven companies under his office’s watch must cut pay packages for their top 25 executives by about 50 percent, including a 90 percent reduction in cash salary. Feinberg also plans to “curtail many corporate perks, including the use of corporate jets for personal travel, chauffeured drivers and country club fee reimbursement.”

An executive at one of the seven companies told the Wall Street Journal that “the terms came as a shock,” and that the restrictions “were clearly much worse than what had been anticipated.” And of course, CNBC, which never hesitates to defend bailed-out bankers and their sky-high bonuses, went to bat for the banks once again, arguing that Feinberg should make pay comparable “across the industry,” lest some bankers take such exception to their pay cuts that they go work at the DMV. Watch it:

CNBC also managed to blame the falling value of the dollar on Feinberg’s decision. But if Feinberg really applied compensation levels comparable to other Wall Street banks, his restrictions would be rendered moot, as Wall Street pay is headed for a record high this year, eclipsing the previous highs from 2007. (For the record, the average DMV employee makes $35,000 per year.) Goldman Sachs alone has already set aside $16.7 billion for compensation.

And this gets at the limitations of the administration’s action. While I think it is entirely appropriate that Feinberg crackdown on the pay at these seven companies, they represent only the tip of the iceberg when it comes to problems with Wall Street’s pay structures.

As Nomi Prins wrote, “by simply tying compensation caps to the TARP program (a year late), Feinberg and the Obama administration are completely ignoring the rest of the $14.6 trillion federal bailout and subsidization of the banking industry, which has helped propel many key banks to 2007 levels of compensation, unfettered.” And as evidenced by Goldman Sachs analyst Brian Griffiths’ comment yesterday that we must “tolerate” income inequality “as a way to achieve greater prosperity and opportunity for all,” Wall Street doesn’t seem too interested in changing things on its own.

The Fed took a step towards reform today, seeking comment on compensation formulas that would defer payment over a longer-term. Indeed, what has to happen — by regulation if necessary — is that a large percentage of any particular pay package needs to be tied to the long-term performance of the firm. This, along with a resolution authority that ensures that banks can fail without bringing down the rest of the economy, will correctly align incentives going forward, and hopefully help to prevent another situation in which Wall Street bankers run to the federal government for aid and then use that aid to line their own pockets.