More bank pay should be in debt, deferred for 10 years -Fed's Dudley

Oct 20 (Reuters) - Banks should defer bonus payments for 10 years and make employees bear the brunt of legal fines, a top Federal Reserve official said on Monday, taking aim at continued lapses across the industry even after the 2007-9 financial crisis.

New York Federal Reserve Bank President William Dudley said banks should move toward paying employees in debt securities for their annual bonus incentives, rather than in equity.

Dudley, speaking at a banking conference held by the New York Fed, said legal fines should be paid through deferred debt compensation programs, which would offer added incentive for bankers to follow industry regulations.

(Reporting by Michael Flaherty; Editing by Andrea Ricci)