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FDIC to weigh in on bank pay next week

WASHINGTON (Reuters) - The board of the Federal Deposit Insurance Corp will meet on January 12 to consider proposing rules on compensation for bank employees, the agency said on Wednesday.

The FDIC did not provide details on what it will propose, but it has been expected that the agency will weigh in on the issue of banker pay, which some officials have said encouraged excessive risk taking and contributed to the recent financial crisis.

The action by the FDIC board, which includes the heads of the Office of the Comptroller of the Currency and the Office of Thrift Supervision, would follow pay guidelines issued by the Federal Reserve in October.

The Fed's bank pay guidelines, while somewhat vague, gave supervisors more explicit instructions to police pay for any employee able to take risks that could significantly and adversely affect the safety of a firm.

The Fed also is conducting a more thorough review of the practices of the 28 largest and most complex banking organizations.

Sheila Bair, chairman of the FDIC, has been vocal about pay issues, saying excessive pay "distresses me."

She has called for more rational bonuses throughout financial firms and pay that rewards real performance, not short-term gains.

Indicating her interest in the issue, Bair has met in recent months with the Obama administration's pay czar, Kenneth Feinberg. Feinberg is charged with dictating pay packages for the top earners at firms that have received the largest taxpayer bailouts.

(Reporting by Karey Wutkowski; editing by John Wallace)

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