Todd Henderson's 'Regulation' Article on Paying Bank Examiners for Performance
Paying Bank Examiners for Performance
Regulation
April 5, 2012
"Bank regulators are not paid for performance. They are civil servants paid a fixed salary that does not depend on whether their actions improve banks’ performance, protect banks from failure, or increase social welfare. In fact, trying to curb risk taking at a bank may be personally very costly for a bank regulator. Without a larger upside than what civil service compensation offers, regulators too often do the rational thing and play it safe, shying away from confrontation over potentially ill-advised bank policies."
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