BankThink

Receiving Wide Coverage ...Citi's Executive Pay Plan: Citigroup is revamping its executive pay plan by now linking a portion of an executive's total compensation to the "company's performance relative to other big banks." These so-called "performance share units," payable three years after the firm meets performance goals, are being introduced after investors revolted against a proposed $15 million compensation package for former (and ultimately ousted) CEO Vikram Pandit in April. The new structure "will pay 40% of awards in cash, 30% in deferred stock and 30% in performance share units," the FT says. To get the maximum pay in the new category, CEO Michael Corbat "will have to achieve a return on assets of 0.85% and deliver a total shareholder return above four peers," the FT reports. Executive pay, generally, has remained a point of contention following the financial crisis, but any kudos Citi was set to reap for its revamped bonus plan were dwarfed by the announcement that CEO Corbat, who took over for Pandit in October, was being awarded $11.5 million for 2012. This compensation package puts him on par with B of A CEO Brian Moynihan and JPMorgan Chase CEO Jamie Dimon, despite the fact that, as Shanny Basar tweeted, Corbat's "only been CEO for 2 minutes." As this New York magazine blog post notes, "if Corbat made $11.5 million under the new rules, think about what he could have raked in under the old." Wall Street Journal, Bloomberg

The Consumer Financial Protection Bureau is seeking public comment on the most beneficial ways for Congress and regulators to step in and aid distressed student loan borrowers.

Recreating this industry involves regulation that more effectively aligns the interests of lenders and borrowers, consumer education and outreach and market-driven solutions.

An advisory council warned the Consumer Financial Protection Bureau that borrowers are still at risk from small-dollar loans with high fees and roll-over debt.

Receiving Wide Coverage ...Whispers at the Federal Reserve: Is the Fed getting ready to end its stimulus efforts? That's what some folks are wondering after minutes from the January Federal Open Market Committee meeting indicated "widening divisions among [Fed] officials" about the central bank's current monetary policy (which, recall, involves monthly purchases of about $85 billion in long-term bonds and mortgage-backed securities for an indefinite period). The stock market posted its biggest loss of the year upon learning "many" officials had expressed concerns that the ongoing QE3 could encourage excessive risk-taking and promote inflation. These concerns could lead the Fed to "taper or end" its asset purchases before unemployment improves substantially, an FT article notes. But investors' worry over QE3's imminent end may be premature since Fed chairman Ben Bernanke remains committed to the program. "We view Mr. Bernanke as being firmly in charge of the committee, and very dovish indeed," one analyst quoted in the Times wrote in a note to clients. He went on to predict the asset purchases will continue at the current pace for the rest of the year. "The prevailing sentiment at the Fed, as conveyed by the minutes as well as recent remarks, is that the central bank's efforts to pump tens of billions of dollars into the economy every month should not end anytime soon," a Washington Post story echoes.

Banks, already way long on deposits, will end up paying even lower rates as funds flood in if money market mutual funds are forced to use floating net asset values.

Many problems with payday products are concocted by activists and politicians with mercenary intent who are more interested in squelching innovation than letting people make choices for themselves.

If the FSOC fails to get the SEC to adopt new standards, it could look weak. If it succeeds, this mechanism will be used more often. Either way, the intervention is likely to sow division among regulators.

The Consumer Financial Protection Bureau has received its second warning for unclear and inefficient supervision from the U.S. Chamber of Commerce.

Properly measured and appropriately set capital levels have a long way to go before becoming excessive.