WASHINGTON — A group of U.S. bankers has told top Federal Reserve officials that regulators' focus on restraining bankers' pay is creating "unnecessary tension."

At a meeting last month with Federal Reserve Chairman Ben Bernanke and other top officials, executives said the Fed's goals for bankers' incentive compensation are a source of friction with regulators. Minutes of the May 11 meeting of the Fed's "Federal Advisory Council" were posted Monday on the central bank's website.

The advisory council has 12 banking industry representatives as members, including Citigroup Inc. (C) CEO Vikram Pandit, Capital One Financial Corp. (COF) CEO Richard Fairbank and U.S. Bancorp (USB) CEO Richard Davis. Also present at the meeting were Federal Reserve Governors Janet Yellen and Daniel Tarullo.

The bankers said it is "commonly perceived" that banks' performance goals will be criticized by bank regulators if they are not easy to meet and do not reward "exceptional performance," the minutes read.

"Shareholders, however, rightfully want to encourage exceptional effort and corresponding performance, and doing so should not be viewed as inconsistent" with safe banking practices, provided that employees are punished if they take on too much risk that leads to losses, the minutes read.

After the financial crisis of 2008, U.S. lawmakers and regulators began scrutinizing executive and employee compensation at financial firms to try to stamp out any pay practices that could lead to dangerous behavior, such as the sort of betting on complex financial products that threatened the financial system in 2008.

Federal regulators adopted guidance on incentive compensation in June 2010 and have been requiring large companies to develop plans to revamp their practices. While pay practices have improved, the Fed said in a report last year that "most firms still have significant work to do" to comply with the new guidelines.

Bankers also expressed concerns about the so-called "stress tests" of banks' financial health released by the Fed in mid-March, according to the central bank's summary. Some banks have been critical of the process, questioning gaps between their own internal financial estimates and that of the central bank.

Bankers "continue to have concerns about the uncertainty and confusion generated by the significant differences between the analysis utilized by the Federal Reserve in its (stress test) models and that utilized by the participating banks in their own models," the minutes said.

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