FDIC Considering Higher Fees for Banks With Unsound Compensation Practices

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"FDIC Considering Higher Fees for Banks With Unsound Compensation Practices"

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This seems like a good idea to me:

The Federal Deposit Insurance Corp. advanced a proposal Tuesday to penalize banks for risky compensation practices, despite public opposition from other federal banking regulators.

The FDIC, which collects fees from all banks to repay depositors in failed banks, is considering a plan to impose higher fees on banks with compensation practices that the agency regards as encouraging reckless pursuit of short-term profits without sufficient regard for the risk of long-term losses.

This is apparently generating pushback from other federal bank regulators but it seems like just the sort of measured approach to the issue that the situation calls for. Having the government just step in and say how firms should or should not pay their employees would be problematic. But given the reality of government guarantees in the world of finance, putting a thumb on the scales like this is a sound idea.

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