Fed’s Tough Transparency Talk Doesn’t Apply on Pay

By Steven Sloan



Listen to any speech from a Federal Reserve Board official and at some point, they are almost certain to preach the virtues of greater transparency — both in financial markets and at the central bank itself. But the findings from the Fed’s latest “horizontal review” of industry practices — this time, focusing on compensation — will not be made public. Citing the confidential nature of supervision, the Fed said it would not release the results of its review. That is a departure from earlier this year when the Fed laid bare the capital positions of the 19 largest banks, and markets rallied amid the newfound clarity. Karen Shaw Petrou, the managing director of Federal Financial Analytics Inc., said, “It’s a challenge the Fed has not fully reckoned with related to these horizontal reviews, not just for compensation but down the road for a full range of supervisory issues.”