Fed official suggests banks pay with debtlike instruments

02/19/2010 | Reuters

Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, said regulators should encourage financial institutions to institute compensation policies using debtlike instruments. Kocherlakota, one of the newest Fed figures, made his suggestion in a letter to the Federal Deposit Insurance Corp. The FDIC recently proposed requiring banks with a pay structure that encourages risky bets to pay higher deposit-insurance fees.

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