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Six Federal Agencies Propose Ban on Certain Incentive-based Compensation Structures

RiskManagement proposed proposed rules There is evidence that flawed incentive- based compensation practices in the  financial industry were one of many factors contributing to the financial crisis that began  in 2007. Some compensation arrangements rewarded employe es – including non- executive personnel like traders with large position limits, underwriters, and loan officers – for increasing an institution’s revenue or short -term profit without sufficient
recognition of the risks the employees’ activities posed to the institutions, and therefore potentially to the broader financial system," said the proposal text. 

Comments on the proposal can be submitted until July 22, 2016.