Washington - The US Federal Reserve could get sweeping new powers to approve - or block - the pay packages of banks in an effort to curb the kind of risk-taking that led to the financial crisis, the Wall Street Journal reported Friday. Under proposals still being developed, the US central bank would rule on whether compensation policies of individual banks reward risky behaviour, the Journal said, citing people familiar with the matter. The country's largest banks would get extra scrutiny.
The Fed would have no powers to reject individual executive salaries, but instead would have to approve a bank's policies for awarding salaries and bonuses.
Executive bonuses is expected to be a critical issue at a two-day meeting beginning Thursday of the Group of 20 nations. The European Union has demanded hard caps on bonuses, which the United States rejects.
The latest US proposals, to be unveiled in the coming weeks, are part of a massive overhaul of regulatory reform being put forward by President Barack Obama's administration.
