Fed looks at pay policies beyond top tier

WASHINGTON, Oct. 7 (UPI) -- The U.S. Federal Reserve is reviewing options for pay policies for employees far beyond a bank's top executives, Chairman Ben Bernanke said.

While the Treasury Department is reviewing pay for seven firms that received Troubled Asset Relief Program funds, the Fed is attempting to define new pay guidelines for the 5,030 bank holding companies and 800 state banks that fall under its jurisdiction, USA Today reported Wednesday.

New Fed pay guidelines "will apply not only to the top five or 10 executives but way down into the organization -- to traders or anybody whose activities can affect the risk profile of the company," Bernanke said.

The Fed is looking for policies that will encourage sound businesses practices -- rewarding employees for a quality over quantity, for example.

The Fed's general counsel Scott Alvarez told members of Congress earlier this year, "poorly designed compensation arrangements for business-line employees, such as mortgage brokers, investment bankers and traders, may create substantial risks."

"We view this as a safety-and-soundness issue," Bernanke said.