Obama Targets Bankers' Pay

Their share prices may have stabilized, but President Obama isn’t finished tinkering with the banks just yet: “The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money,” reports The Wall Street Journal. The initiative, still in its early stages, will attempt to peg pay to long-term performance, as opposed to the current bonus system that rewards short-term risks. Options include “using the Federal Reserve's supervisory powers, the power of the Securities and Exchange Commission and moral suasion. Officials are also looking at what could be done legislatively.” The government stresses it won’t try to set pay limits or micromanage, but the banks insist the current structure is necessary to keep employees from defecting to private equity, hedge funds, and foreign banks.