) -- Soon, it seems, Wall Street will lose the top reason most of its employees come there in the first place: money.


Federal Reserve

is considering a proposal that would put it in charge of compensation decisions for financial institutions, according to the

Wall Street Journal

. The move is part of a comprehensive plan by the Obama administration that would make the Fed a risk watchdog of sorts in the financial markets.

The proposal now being considered by the Fed's board appears wide-ranging in scope. Essentially, it would make the Fed an arbiter of pay at any company along the food chain of the financial crisis whose employees were incentivized to take on more risk. Those employees include everyone from the loan officers who drove once-traditional banks into the subprime market, to the traders who leveraged up 30:1 to the top executives who made poor decisions for a firm only to walk out with golden parachutes before its collapse.

The biggest financial firms are expected to receive the closest scrutiny, unsurprisingly so.

American International Group

(AIG) - Get Report

is the biggest recipient of government funds, and became the poster child for bailout

bonuses gone bad in March.

Bank of America

(BAC) - Get Report

is still embroiled in a scandal over bonuses paid to

Merrill Lynch

employees as the firm prepared to report a $15 billion quarterly loss.

Wells Fargo

TheStreet Recommends

(WFC) - Get Report

in August preemptively made the decision to weight salary raises in stock rather than cash to align interests with that of shareholders.

Those and scores of other firms, including

Goldman Sachs

(GS) - Get Report


Morgan Stanley

(MS) - Get Report



(C) - Get Report

, have been closely watched by regulators to ensure that pay packages are acceptable, and CEOs were

called to task about pay policies in February. At the time, the administration had put in place a rule that capped executive compensation at $500,000 for companies receiving "extraordinary help" from taxpayers, and Congress soon passed restrictions of its own.

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