FDIC's Bair says banker pay can pose systemic risk

Sheila Bair, Chairman of the Federal Deposit Insurance Corporation (FDIC), speaks at the Symposium on Interest Rate Risk Management in Arlington January 29, 2010.

WASHINGTON (Reuters) - U.S. bank regulator Sheila Bair defended her agency's move to clamp down on excessive banker pay on Monday , saying the stability of the financial system is at stake.

Bair, the chairman of the Federal Deposit Insurance Corp, said the agency is not seeking to set specific pay levels but believes that banks with risky compensation plans should have to pay more for deposit insurance.

"The stability of our financial system requires that the interests of management be aligned with all financial stakeholders in the firm -- including debt and equity holders -- in order to prevent the type of excessive risk-taking that led to this crisis," Bair said in prepared remarks before the Council of Institutional Investors.

She also pushed for Congress to pass financial reform and said unless it acts now, the United States could soon be planting the seeds of the next crisis.

(Reporting by Karey Wutkowski and Rachelle Younglai, editing by Gerald E. McCormick)