White House ready to issue pay rules
WASHINGTON - Nearly three months after
The regulations, expected as early as today, would apply to the 20 most highly compensated employees at financial firms that obtained infusions of $500 million or more in assistance from the $700 billion Troubled Asset Relief Program.
The government, however, is not stopping at federally assisted institutions. Treasury Secretary Timothy Geithner and Federal Reserve chairman Ben Bernanke want to give the Fed and the Securities and Exchange Commission greater powers to set compensation guidelines across the financial sector.
Bonuses totaling $165 million issued in March by insurance conglomerate AIG, which had received billions of dollars in financial assistance, set off a public and congressional outcry.
Obama and his economic team have been trying to temper the populist urge to cap salaries while at the same time harboring a belief that compensation practices contributed to the current crisis by encouraging high risk taking.
"I think boards of directors did not do a good job," Geithner said yesterday. "I think shareholders did not do a good job in terms of discipline and compensation practices."
The financial sector has been pushing back, arguing that restrictions that are too stringent could drive away professional talent.
"This is the opening of Pandora's Box," said Tom Quaadman, an expert on financial institutions at the US Chamber of Commerce.
It was unclear yesterday how much of its executive pay package the administration planned to detail this week and how much it would include in a broader list of regulatory proposals that President Obama will announce next week.