Fed's Bernanke pushes higher bank capital, better pay practices

Thu Nov 14, 2013 9:30am EST

1 of 2. U.S. Federal Reserve Chairman Ben Bernanke addresses a town hall event for teachers at the Federal Reserve Board's building in Washington November 13, 2013.

Credit: Reuters/Jonathan Ernst

(Reuters) - Federal Reserve Chairman Ben Bernanke on Thursday reiterated the need for banks to hold more capital and liquid assets to survive a market shock, and he endorsed practices that link executive pay to performance.

"One of the most important goals is to ensure that banks hold more and higher-quality capital, and have sufficient liquid assets on hand, to be able to survive a market shock or severe economic downturn," said Bernanke, who is to step down from the U.S. central bank at the end of January.

"We must push banking organizations of all sizes to ensure their compensation practices link pay to performance and do not encourage excessive risk-taking," he said in prepared remarks to a conference of the Union of Arab Banks.

Financial regulators globally are adopting new rules to reinforce banks and protect against a repetition of the 2007-2009 financial crisis.

Bernanke was speaking via prerecorded video. He did not comment on monetary policy or the U.S. economy.

(Reporting by Timothy Ahmann and Jonathan Spicer; Editing by Chizu Nomiyama)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (4)
UncleFrank wrote:
Chairman Bernanke was quite open in the intent of the zero interest rate policy (ZIRP). It was to punish prudent savers who depend on FDIC insured deposit accounts to subsist on, in addition to Social Security, in their retirement years. While, at the same time, he rewarded the top 10 percent who have 81% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate. Ben Bernanke should be quite proud that he destroyed the lives of so many pensioners and elderly who can’t afford the risks of the equity markets with their meager savings that they worked so hard for.

Nov 13, 2013 8:48pm EST  --  Report as abuse
nose2066 wrote:
Well yes the Federal Reserve is open in its statements. The problem is the lack of transparency in what happens to the money they create.
We can see that they create trillions of dollars of new money. Then that money disappears somewhere inside the financial system. The Federal Reserve claims that some of that money actually comes back out of the financial system and helps the economy in some way. That part is very murky.

Nov 13, 2013 11:17pm EST  --  Report as abuse
Cleveland2012 wrote:
In other words: every decision was made behind a series of locked doors, and all of those benefiting most got a wink and a nod.

Nov 14, 2013 9:25am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.