FINANCIAL REFORM -- March 23, 2010 at 2:47 PM EDT
Pay Czar Caps Compensation at Five Bailed-Out Firms
Kenneth Feinberg, the Obama administration's pay czar, announced Tuesday that he will cut 2010 salaries for top executives at five companies that received extraordinary bailout assistance from the government at the height of the financial crisis.
The highest-paid employees at AIG, General Motors, GMAC, Chrysler and Chrysler Financial will be paid 15 percent less than in 2009, Feinberg said. Cash compensation will decrease by 33 percent.
Feinberg also sent a letter Tuesday requesting 2008 compensation data from as many as the top two dozen executives at each of 419 firms that received TARP funds, including Goldman Sachs, JP Morgan, and Morgan Stanley. Feinberg could use the data to determine whether 2008 bonuses were excessively high and whether money should be returned to the U.S. government.
Wall Street has frequently criticized Feinberg's mission and imposed pay cuts with the argument that companies could lose top talent if they aren't allowed to compensate them as they see fit. But the new data show that of the more than 100 executives at bailed-out companies whose pay was set by Feinberg, nearly 85 percent are still in their jobs, suggesting slashes in pay aren't pushing them to find other work.
Feinberg's announcement comes a day after the financial reform package moved to the Senate floor for debate, passing the Senate Banking Committee on a 13-10 party line vote. After the bill passed committee, President Barack Obama released a statement praising the move and urging action in the full Senate (see more reactions here):
And as this bill moves to the floor in the coming weeks, I will continue to fight to strengthen the bill and against attempts to undermine the independence of this agency. ...I urge those in the Senate who support these efforts to resist pressure from those who would preserve the status quo and to stand up for long overdue reform that will protect American families and the long term health of our economy.