The Irish Independent reports that unions last night demanded a punitive 54pc tax on those earning more than €100,000 as one solution to the economic crisis -- in a graphic example of the gap between them and the Government ahead of the Budget.
When combined with PRSI, income and health levies, such a rate would mean workers paying 63pc on salaries over €100,000. Those earning more than €175,000 would be hit by a combined 65pc tax rate as a higher income levy would kick in.
The plan places the union body at loggerheads with the Government after the unions were asked to offer alternatives to the proposed €1.3bn in public sector pay cuts.
Finance Minister Brian Lenihan has warned that unions are deluding themselves if they think state coffers can be replenished by tax increases.
The Irish Congress of Trade Unions (ICTU), who made the demand for the 54pc rate last night, claimed such a tax would help economic recovery. But ICTU admitted it could only provide "guesstimates" on the amount the new tax rate would bring in.
Talks between union and government officials on the €4bn in spending reductions will intensify in Government Buildings this afternoon.
The union umbrella group still wants the Government to string out the recovery period over a longer timeframe. And it is not proposing cuts to services or pay.
With unions primed for a series of demonstrations and strikes in protest over the Budget, ICTU secretary general David Begg reiterated his opposition to pay cuts and called for the new higher tax rate.
Having already introduced the levies this year, Finance Minister Brian Lenihan has repeatedly signalled he will not introduce new income taxes.
To raise €1bn in extra revenue from those on six-figure salaries would mean jacking up the tax rate to 63pc, Mr Lenihan said, or some 22pc ahead of the current top rate of income tax.
Last night, Tanaiste Mary Coughlan warned that the gulf between the private and public sectors was "hurtful".
"Naturally we can appreciate that everyone is under a lot of pressure. What we are seeing is the differential between the public and the private sector, which I think is hurtful, and I think it would be best if everyone came together for the betterment of Irish society," she said.
Gearing up for prolonged talks, Mr Begg said there had been an "extraordinary effort" to claim that all wealth in the country had evaporated. But he argued that the top 1pc of the population made €75bn during the boom era, and €1.8bn in taxes remains uncollected.
Mr Begg said it was unfair that someone earning €200,000 continued to pay tax at the same rate as a person earning below average industrial earnings.
"I think the most important thing in this is that there is a clear demonstration effect that the people who are best able to make the contribution are seen to do that," he said.
In terms of wages, the proposal only says there "may be a case for wage moderation" in combination with policies to control other costs.
On cutting back on public services, ICTU claimed it made "no sense" and could "fatally undermine" services such as health and education.
"It is arguable that our health service has never recovered from the corrosive effect of the savage cuts imposed in 1980s," the document said.
Suffering
"The level of suffering that will be experienced by the most vulnerable in the community if €1.3bn is cut in Budget 2010 will be traumatic."
Central to the 10-point plan is the creation of a National Recovery Bond, which would fund specific infrastructural projects, providing construction employment.
In addition, ICTU called for the creation of a €1bn fund to promote the type of job-sharing initiatives pioneered successfully in Germany, other EU countries and Singapore.
But Exchequer figures, which are also due out today, will put both negotiating teams under further strain and pressure.
The tax take is expected to be down by 17pc or 18pc on last year's €31.5bn take to October.
The Irish Independent also reports that there was no comment from Ulster Bank yesterday after its parent group Royal Bank of Scotland (RBS) said it would have to sell more of its businesses than planned to gain European approval for British state support. However, it is understood Ulster Bank will not form part of the planned sell-off of assets.
RBS is Britain's biggest state-controlled bank. Shares in the group dropped as much as 14pc at one stage yesterday.
The agreement with the EU will "include some divestments not initially contemplated", the group said yesterday. "It remains RBS's goal that any required divestments do not threaten its recovery plan."
RBS may have to sell its Churchill, Direct Line and Green Flag insurance operations along with more than 300 bank branches, and shrink its investment banking unit after receiving £20bn (€22.12bn) from the British government last year, Bloomberg reported.
RBS is poised to make further announcements on the British Asset Protection Scheme and state aid agreement by Friday, when the firm unveils its third-quarter results.
The Irish Times reports that any deal with the Government to avoid public sector pay cuts is likely to involve significant reductions in the number of people employed in the public sector from 2011, Impact general secretary Peter McLoone has warned officials in his union.
In a private and confidential letter sent to Impact industrial relations staff in recent days Mr McLoone said: “In my judgment the alternative [to pay cuts] is likely to involve a significant reduction in public service numbers over the next three to four years, with the likelihood that some additional exceptional measures will also be needed in 2010 to deal with the budgetary crisis next year.”
Mr McLoone outlined in the letter what was happening in talks between the Ictu Public Services Committee and Employer Representative Bodies and said the talks would not deal with the issue of additional taxation – one of the main points of the updated 10-point recovery programme published yesterday by the Irish Congress of Trade Unions.
“In fact, in my view, further increases in existing tax rates in the December budget will simply not feature,” he wrote.
Public sector trade unions and Department of Finance officials resume talks today which are aimed at exploring whether the €1.3 billion savings being sought by the Government can be secured by ways other than cutting pay. In the absence of any deal public services, including schools and the health sector, are likely to be hit by strikes on November 24th.
The Department of Finance has told Government departments and agencies that it expects an acceptable level of services to be maintained on Friday during Ictu’s day of action. It said that staff could take leave but that anyone involved in unauthorised absences would face normal disciplinary procedures including docking of pay.
The unions expect the Government will today set out its view of the size and scale of the public service at the end of the economic recovery period in 2013 – an issue at the heart of the alternative plan they are examining.
Senior union and employer sources said if the Government agreed to consider the alternative plan in detail, it could involve reducing public sector numbers considerably over the coming years by maintaining the existing moratorium on recruitment as well as continuing the current incentivised career break and early retirement schemes.
Sources said it could also involve some form of redundancy programme for staff in State agencies or bodies who could not be redeployed.
Sources said if numbers were reduced significant reform measures would be required to allow services to be maintained, or even increased in some cases.
The exceptional measures needed to produce savings next year, before the significant reduction in numbers came on stream, could be drawn from a menu of cost-saving measures which are likely to be tabled in the current talks. Highly placed sources suggested that this menu could include:
- paying overtime at flat rates rather than time and half
- introducing an 8am–8pm core day during which no overtime payments would apply
- the possibility of staff working a small number of days annually for less pay
- the possibility of staff working a small number of additional hours per week and the elimination of privilege days at Christmas and Easter.
However, at this stage there is no guarantee that any such measures could be agreed by all unions.
The talks between unions and the Department of Finance resume in the wake of a warning by the Tánaiste Mary Coughlan yesterday that a national public sector strike would send out the wrong message to potential overseas investors. She urged the unions to enter into negotiations with the Government rather than embark on strike action.
Separately, the Irish Congress of Trade Unions yesterday said Government should not tighten expenditure until the economy begins to recover.
In an update on its 10-point strategy it also proposed a third effective tax rate of about 54 per cent and opposed cuts in social welfare.
The Irish Times also reports that property developer Bernard McNamara is seeking to have the Dublin Docklands Development Authority (DDDA) guarantee his exposures in a dispute where he faces being sued for in excess of €140 million.
The dispute arises from arrangements put in place for one of the largest property deals conducted during the property boom – the 24.9 acre former Irish Glass Bottle site in Ringsend, Dublin 4, which cost the purchasers €424.34 million.
The developer yesterday had his case admitted to the fast-track Commercial Court, which was told he is being sued by a group of investors organised by Davy Stockbrokers, who lent him €62.55 million in January 2007, at an interest rate of 14 per cent per annum. Mr McNamara also faces a potential claim of €45.9 million, plus interest, from the now nationalised Anglo Irish Bank.
In an affidavit, Mr McNamara said he was contacted by the then chief executive of the DDDA, Paul Maloney, in October 2006, who asked if Mr McNamara was interested in jointly bidding for the site. Mr McNamara said Mr Maloney told him the DDDA had powers which would allow it fast-track any application to develop the site, without risk of an appeal to An Bord Pleanála.
A company called Becbay eventually bid successfully for the site. It secured a loan of €288.4 million from Anglo Irish Bank, (which later split the provision with AIB), and got capital injections from its three shareholders: the DDDA; Mr McNamara’s company Donatex, and a company owned by the property financier, Derek Quinlan. Between them they put up €136 million. Mr McNamara guaranteed some of the bank borrowings. Donatex in turn secured its finance (€62.5 million) from a group of investors put together by Davy Stockbrokers. The names of these investors have not been revealed.
They are represented by a company, Ringsend Property Ltd, which has an address in the Channel Islands. Again Mr McNamara supplied a guarantee. Mr McNamara is claiming he is entitled to damages and indemnities from the DDDA because it made claims concerning its ability to secure planning for the site, which have not transpired to be correct. A spokesman for the DDDA, speaking after the court application, said it would vigorously contest the case. Mr McNamara said that in his discussions with Mr Maloney, he was told the DDDA owned land on the south bank of the Liffey which would enable it to procure a route for the Luas from the Point Village to the Irish Glass Bottle site.
He said he was also told the DDDA had held talks with the Railway Procurement Agency which had estimated the cost of this as being €60 million. The Davy investors have initiated proceedings in the High Court seeking the return of the funds given to Donatex, interest, and a “redemption premium”.
When they sought the money from Donatex on August 11th the amount involved was €93,319,803. When they sought it from Mr McNamara on August 19th, the sum had grown to €93,639,424. When they initiated proceedings on October 13th, the sum was €95,845,010. Interest, at 14 per cent, continues to mount.
The Irish Examiner reports that at least one person was sent to jail every day because they were unable to pay credit card bills or meet loan repayments to banks, credit unions or other lenders in the months following the Government’s rescue of financial institutions.
Despite banks promising a more flexible approach to loan defaulters, there was a rise in the rate of imprisonment for debtor offences after the state guarantee was introduced just over a year ago.
Figures show 32 people were handed down sentences in the run-up to Christmas last year because of inability to meet loan repayments despite banks getting a capital injection of €5.5 billion in December.
The official Department of Justice figures show the problem of spiralling debt led to 306 cases of imprisonment last year and 186 cases up to June of this year – the latest date for which figures are available.
This does not include the estimated 25,000 cases of homeowners in mortgage arrears.
In a written response to a Dáil question Justice Minister Dermot Ahern said: "The average length of sentence imposed on each offence was 27 days. The average length of sentence served was 20 days. Some persons paid their debt while in prison which would automatically release them from their sentence."
He said: "The number of such persons held in custody at any one time is a tiny fraction of the overall prisoner population."
Despite an almost doubling of the rate of imprisonment in the first six months of this year compared with 2007, Mr Ahern said there is no one in custody due to a failure to meet repayments.
Cases are expected to reduce because of a High Court ruling in June that places the onus of proof on banks that a defaulter has refused to pay.
However the laws were last night described as outdated and the Government was urged to bring in legislation to ensure debt cases are not dealt with in the courts and defaulters are not sent to jail.
The Free Legal Advice Centre (FLAC) is calling for new laws to put formal debt management plans between banks and debtors on a statutory footing.
Senior policy researcher at FLAC, Paul Joyce, said the current laws are "woefully inadequate in terms of their appropriateness for 2009" and are "not adjusted to the reality of our consumer credit society".
He said: "A lot of the bubble was based on consumer spending. Where did the people get the money? They borrowed it."
The revised Programme for Government agreed between Fianna Fáil and the Green Party last month promised to "create a new system of personal insolvency regulations".
But there are no concrete plans to do so and legislation has not been drawn up in the area.
The Irish Bankers Federation said it has developed a new protocol on debt management which requires lenders to work with borrowers.
The Financial Times reports that political pressure to cut banks down in size was “totally misguided”, Josef Ackermann, chief executive of Deutsche Bank and chairman of the Institute of International Finance, warned on Monday in a scathing attack on regulatory thinking.
In a passionate defence of big banks, Mr Ackermann said the current push by regulators for banks to organise themselves as a string of subsidiaries was “completely unacceptable”.
“The idea that we could run modern, sophisticated, prosperous economies with a population of mid-sized savings banks is totally misguided,” he said.
The Swiss-born banker, the closest the world has to a spokesman for the financial sector, was speaking at a conference on regulation organised by the Financial Services Authority, the UK watchdog.
His comments come as Sheila Bair, chairman of the US’s Federal Deposit Insurance Corp, lashed out at attempts by the banking industry to fight the reform of financial rules. She said it made her angry that opponents wanted to maintain their reliance on taxpayer-funded rescues.
Earlier, Lord Turner, the FSA’s chairman, acknowledged that “multiple policy instruments, rather than a non-existent silver bullet that solves all our problems ... should probably inform our overall policy response to the ‘too-big-to-fail’ problem”.
Part of that response should be a focus on encouraging local regulators to demand adequate capital and liquidity levels locally, rather than impose vastly higher capital requirements at a central group level.
“My own feeling is that a greater focus on standalone national subsidiaries will be appropriate at least for some banking groups,” Lord Turner said.
But Mr Ackermann said such restrictions would make a nonsense of the EU, where banks can operate across borders without having to set up subsidiaries. He warned any such move would “effectively kill” the single banking market in the EU.
On the contrary, he said, Europe needed to build on its current co-operation. He called for the creation of a bank bail-out fund, part-financed by governments and part by the banking industry, that would step in to recapitalise a failing bank.
Although Mr Ackermann said the world’s commercial and investment banks, had no quarrel with the overall principle of higher capital levels in the wake of the financial crisis, he said demands for an abrupt rise in banks’ capital requirements risked “choking economic activity”. A “staggered” rise in capital ratios made more sense.
The FT also reports that the dollar stands at a critical juncture as investors await policy decisions from three of the world’s main central banks this week.
The Federal Reserve delivers its verdict on monetary policy on Wednesday, while the European Central Bank and the Bank of England give their verdicts on Thursday.
The decisions come as the rallies in risky assets such as stocks, commodities and higher-yielding currencies look vulnerable. This has stoked haven demand for the dollar, pulling it back from multi-month lows.
Since hitting a 14-month low of $1.5061 against the euro at the start of last week, the dollar has rallied 2 per cent as global stocks have retreated.
Analysts say investors are feeling increasingly uneasy over the sustainability of the global economic recovery as ultra-loose monetary policy accommodation is gradually removed.
“The world is a bit like an alcoholic that’s become too reliant on central bank liquidity,” says Steve Barrow at Standard Bank.
“We might still be many, many months away from the first rate hikes from the likes of the Fed, ECB and the Bank of England, but it seems that the market wants to panic now, rather than wait.”
Some central banks have already moved to withdraw monetary accommodation. Commodity-rich Australia and Norway raised interest rates last month, while India moved to tighten monetary policy by increasing the capital requirements of commercial banks.
But it is the actions of the main central banks, particularly the Fed, that will determine wider trends in the currency market.
Analysts say this week’s Fed meeting is likely to prove key in determining whether the current downward correction in risky assets and the dollar rally extend further.
There has been growing speculation that at upcoming meetings the Fed will drop its commitment to maintain loose monetary policy for an “extended period”.
“If we do get a change in forward-looking language, markets would likely view this as a signal that the Fed is getting closer to tightening monetary policy,” says Ray Farris at Credit Suisse.
“The dollar would stand to benefit from a consequent move higher in yields to the extent it moved interest rate differentials back in the dollar’s favour and also served to exacerbate pressure on risky positions more generally.”
But analysts say the Fed faces a delicate balancing act. The equity market rally has partly been driven by US investors seeking higher returns on the cash stockpiles parked in low-yielding money market funds after the financial crisis. Thus, dollar weakness and global equity market strength have run hand in hand.
But analysts say concerns over long-term inflation risks in the bond market have risen. This spilled over into the currency markets last month, sending volatility, and thus the price of insuring against a rise in the dollar, sharply higher.
In turn, the rising cost of hedging currency risk increased the cost of holding short positions in the dollar, undermining the funding position for equity markets that had been supported by cheap dollar liquidity.
Hans Redeker, at BNP Paribas, says understanding this mechanism is important for trading the currency markets successfully.
“The source of rising currency volatility is in bond markets and the related assessment of long-term inflation risk,” he says.
Mr Redeker says that the Fed therefore is facing a dilemma when it decides on the wording of the statement after its policy meeting.
He says leaving the statement unchanged signals that the central bank will keep the floodgates of monetary accommodation open for an extended period, which might be initially cheered by equity markets.
“But in order to get the all-clear for further dollar weakness, the bond market has to remain constructive,” says Mr Redeker. “If the bond market loses confidence in the Fed’s stance of guaranteeing price stability, the equity market rally will soon hit the wall again, with a stronger dollar working as the catalyst.”
The ECB’s decision on Thursday is likely to have less impact on market sentiment, with the vast majority of forecasters expecting no change in policy outlook or interest rates.
But the Bank of England’s decision is likely to be more closely watched amid speculation that the central bank could extend its quantitative easing programme by as much as £50bn ($82bn) to £225bn after the surprising fall in third-quarter UK GDP.
Mr Barrow says the BoE’s decision on QE could be crucial, not just for UK markets but for global markets too.
“If the Bank goes against the consensus and pauses or, worse still, stops quantitative easing, the market’s fears about liquidity withdrawal will rise even more and there could be a bloodbath in stocks,” he says.
The New York Times reports that public health experts worried about the spread of the H1N1 flu are raising concerns that workers who deal with the public, like waiters and child care employees, are jeopardizing others by reporting to work sick because they do not get paid for days they miss for illness.
Tens of millions of people, or about 40 percent of all private-sector workers, do not receive paid sick days, and as a result many of them cannot afford to stay home when they are ill. Even some companies that provide paid sick days have policies that make it difficult to call in sick, like giving demerits each time someone misses a day.
Public health experts say policies like these encourage many people with H1N1, commonly called swine flu, to report to work despite official warnings from the government and most companies that they should stay home.
“For people who are really caught on a weekly income, if they can’t make a go of it, they might say, ‘I’m desperate. I’m going to do what I have to do, and I’m going into work even though I’m sick,’” said Robert Blendon, a professor of health policy at Harvard.
He warned that this might spread disease, and that these financially squeezed workers might send their flu-stricken children to school, infecting others.
Well before President Obama declared H1N1 a national emergency, the federal Centers for Disease Control and Prevention was emphasizing that businesses should adopt “flexible leave policies” to allow workers with the flu to stay home. In one advisory, the C.D.C. encouraged employers “to develop nonpunitive leave policies.”
Despite such recommendations, some employees say they have no choice but to go to work sick.
When Latisha Carter caught H1N1 from her 6-year-old daughter in June, she suffered headaches, chills and diarrhea, but she reported to her $13-an-hour help desk job at a Milwaukee insurer nonetheless. The temp agency that placed her does not offer her paid sick days.
“If you’re sick, they encourage you to stay home, but I couldn’t afford to take off if I wasn’t going to get paid,” said Ms. Carter, 29, who said she stuck to her small work area to avoid spreading the flu.
Georges C. Benjamin, executive director of the American Public Health Association, a group of 30,000 public health professionals, said, “Providing workers with paid sick days is essential if we’re going to get serious about the public health recommendations for swine flu — stay home until 24 hours after your fever is broken. That usually takes about five days.”
For many businesses, H1N1 has created a dilemma. “This is a very difficult issue for companies,” said Nina G. Stillman, a lawyer with Morgan, Lewis & Bockius who advises companies on sick-leave policy. “Employers who do not offer sick days are not prepared to offer them now, and they recognize that this may result in not achieving what they say they would like, which is that people who are sick stay home.”
The C.D.C. says that swine flu is widespread in 48 of the 50 states and has already hit as many as 5.7 million Americans.
Many worker groups and women’s groups have seized on the H1N1 pandemic to argue that Congress should enact legislation guaranteeing paid sick days. San Francisco and Washington have enacted such legislation, but similar measures face obstacles in Congress.
“Sometimes you talk about legislation in the abstract, but this is making people begin to understand the problem,” said Rosa DeLauro, Democrat of Connecticut and lead sponsor in the House of a bill, with more than 100 co-sponsors, that would require employers with 15 or more workers to provide seven paid sick days a year.
Business groups oppose such legislation, calling it expensive and unnecessary. They say that employers already allow and even encourage sick employees to stay home.
“The vast majority of employers provide paid leave of some sort,” said Randel K. Johnson, senior vice president for labor at the United States Chamber of Commerce. “The problem is not nearly as great as some people say. Lots of employers work these things out on an ad hoc basis with their employees.”
According to the Bureau of Labor Statistics, 39 percent of private-sector workers do not receive paid sick leave.
Workers at many retailers and restaurants say their employers’ policies discourage them from calling in sick. At Wal-Mart, when employees miss one or more days because of illness or other reasons, they generally get a demerit point. Once employees obtain four points over a six-month period, they begin receiving warnings that can lead to dismissal.
In addition, when Wal-Mart employees call in sick, their first day off is not a paid sick day (although workers can use a vacation day or personal day), but the second and third days are paid. The policy is meant to keep workers who are not actually sick from taking a day off to, say, go fishing.
Paul Hotchkiss, a support manager at a Wal-Mart store in Hastings, Minn., said the point system pressured him to report to work two weeks ago even though he had swine flu.
“There are a lot of people who have swine flu right now who are going in because they worry about getting fired for having too many points,” Mr. Hotchkiss said.
His supervisor sent him home because he looked pale, he said, adding that he did not see a doctor because he could not afford the company’s health insurance.
Wal-Mart officials say the company insists that workers with H1N1 stay home and has policies making it easy to do so.
Mandy Pillar, a nurse at Linwood Elementary School in Wichita, Kan., said more than 20 percent of the students were out sick when H1N1 swept through two weeks ago.
“We were sending 12 and 15 kids home a day with fever,” she said. “The next day they’d be back. They’d say, ‘I still feel bad. I still have a fever.’ So we’d ask, ‘Why are you back here?’ And they’d say, ‘because Mommy had to work.’ ”
A survey last year by the National Opinion Research Center at the University of Chicago found that 68 percent of those not eligible for paid sick days said they had gone to work with a contagious illness like the flu, while 53 percent eligible for paid sick days said they had done so.
That survey found that 11 percent of respondents said that they had lost a job for taking off for an illness for themselves or a family member, and 13 percent said they had been told they would be fired or suspended if they missed work because of personal or family illness.
Ricardo Copantitla, a food server at Thalassa, a restaurant in the TriBeCa neighborhood of Manhattan, said he called in sick last year when he had the seasonal flu, not H1N1.
“The restaurant said you have to come to work, because they were short of people,” he said. “I had a bad cough, and I felt tired and terrible. But I went to work because I feared being fired.”
Thalassa did not respond to phone and e-mail requests for comment.
Like many restaurant chains, White Castle, which runs 421 hamburger restaurants nationwide, says it takes H1N1 seriously.
“Our policy is that when team members experience illness, we require that they stay home until they are feeling better,” said Jamie Richardson, White Castle’s vice president for corporate relations. “Our policy provides for time off as people need it.”
White Castle does not provide paid sick days, he acknowledged, but he said that workers who stayed home sick would not suffer lost pay because they could work extra hours after recovering.
Ellen Galinsky, president of the Families and Work Institute, said H1N1 had spurred an attitude shift throughout corporate America.
“Before, people looked askance at absenteeism — someone staying out was a problem to the company,” she said. “There was this view that being sick was malingering. But now if someone comes in sick — and there has been subtle pressure to do this — you worry that you can get something very dangerous. You worry that you could bring it home to your children, to your elderly parent, to your husband or wife.”
The NYT also reports that the heads of the nation’s largest banks were summoned by Federal Reserve officials on Monday to discuss what is perhaps the most contentious issue of the post-bailout era: pay.
The meetings, held by the 12 regional Federal Reserve banks, mirrored the extraordinary gathering convened at the height of the financial crisis last autumn, when government officials sought to rescue the banking system from falling apart.
This time, amid signs that the markets are stabilizing, Fed officials told bankers that they needed to re-examine their compensation practices, which have become a political flashpoint in Washington and a widely cited cause of last year’s collapse.
In 20-minute sessions, Fed officials told bankers that they might need to fundamentally reform their pay practices as the agency moved forward with a comprehensive review of 28 large financial institutions. Fed officials imposed a Feb. 1 deadline for them to submit a written plan of any changes, but urged them to begin the overhaul now as they considered bonuses for 2009.
Flanked by their compensation committee chairmen, Vikram S. Pandit of Citigroup, Lloyd C. Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase and John J. Mack of Morgan Stanley passed through the familiar iron gates of the New York Fed building in Lower Manhattan. The chief executives were joined by the American heads of several foreign banks, including Barclays, Credit Suisse, Société Générale and Deutsche Bank.
Senior executives from Bank of America, Wells Fargo and roughly a dozen other large American banks were summoned for similar discussions with officials of the Federal Reserve banks in Richmond, San Francisco and other regional offices. Some talks were by phone.
The meetings were largely procedural, but packed with politics and symbolism, said six people briefed on the discussions.
The Federal Reserve has been criticized by some lawmakers for failing to rein in Wall Street’s excesses and lax enforcement of consumer protections.
If new legislation passes that allows the government to formally take over large financial institutions, the Fed could see a vast expansion of current powers.
Some analysts questioned whether the meetings — and the Fed’s newfound focus on pay — were largely a public relations exercise. Some of the bankers called them a waste of time and said they learned little beyond news reports last month that outlined the new pay guidelines and examinations, said people briefed on the meetings.
But former regulators said that the pay reviews represented a more interventionist approach to bank oversight. Previously, Fed officials had been reluctant to weigh in on compensation issues, believing those decisions should be left to bank boards and managers. Now, they are viewing pay practices as basic safety and soundness issues for the financial system.
“Supervisory initiatives can reinforce the impetus for change already coming from shareholders and market participants,” said Daniel K. Tarullo, the Federal Reserve governor overseeing the compensation reviews, in a speech on Monday in Washington.
In New York and elsewhere, the meetings with the bank officials were brief and stiffly scripted. Few of the Wall Street executives asked questions. But Mr. Mack of Morgan Stanley said it would be helpful if the Fed harmonized their new guidelines with overseas regulators, because more stringent rules could put American firms at a disadvantage to foreign rivals.
Some regional bank executives described their sessions as uneventful.
“I’m sure Goldman’s meeting was very different than the one here,” said one senior executive at a large regional bank who was briefed on the discussions. “We could cut our pay by 80 percent and still not have the problems they have.”
At around 12:30, William C. Dudley, the president of the Federal Reserve Bank of New York, began the meeting with the Wall Street chiefs by rattling off a list of talking points.
Fed officials outlined the process for its review of the industry’s pay practices and the three core principles of their new compensation guidelines: incentive pay should not encourage excessive risk-taking; compensation should be part of good risk management; and banks should have strong governance practices. In other words, the structure of Wall Street’s pay was the Fed’s primary concern, not the amounts of individual bonuses, said the people briefed on the talks.
Among the Fed’s main areas of concern are lucrative severance contracts, multiyear guarantees for bonuses and ensuring that bonus payouts are properly adjusted for substantial risk-taking. Final guidelines will be published by the end of the year.
If the practices of banks are at odds with the new rules, banks will be required to submit a plan for improvements. Bank regulators and officials will then discuss a timetable for the changes, making it likely that many reforms might not take effect until late next year at the earliest.
Even if there were few new details, the meetings did fill the room with some prominent business leaders — including some board and compensation committee chairmen who have been at the center of their own pay controversies.
Mr. Pandit arrived with Richard D. Parsons, the bank’s chairman, who raised eyebrows when he flew on the Time Warner corporate jet to his vineyard in Italy.
Mr. Blankfein arrived with James A. Johnson, the former chairman of Fannie Mae, who now heads the compensation panel of Goldman Sachs. Mr. Johnson’s own pay came under fire from Congress during investigations into the troubled mortgage giant.
Lee R. Raymond, the former Exxon Mobil chief executive who now leads JPMorgan Chase’s compensation committee, came in to attend alongside Mr. Dimon, its chief executive. Mr. Raymond’s career pay of more than $686 million, including a $400 million retirement package, created a public uproar when he stepped down in 2006.
