Federal Reserve, Arbiter of Wall Street Pay

The Treasury Department has since installed a "pay czar" named Kenneth Feinberg, who has been reviewing and approving pay decisions at firms receiving the most U.S. aid. Change is taking hold abroad as well. The Obama administration has urged G-20 countries to adopt rules at their meeting next week that would restrict pay policies. The European Union advised the same on Thursday.

While sweeping in its scope, the Fed's reported move is not unexpected and will probably be the first of many changes to reform Wall Street's old ways. On Monday, President Obama came to Federal Hall ahead of the anniversary of Lehman's failure, advising bank executives to reform their ways.

"Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them," Obama said. "They do so not just at their own peril, but at our nation's."

But if they haven't learned yet, he's ready to teach them.

-- Reported by Lauren Tara LaCapra in New York .

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