Pay czar says ‘no’ to more authority

The Obama administration’s “pay czar” told a congressional panel Wednesday that his authority shouldn’t be expanded beyond the seven biggest corporate recipients of government bailout aid and that the government should get out of the business of regulating Wall Street salaries in the long run.

“These seven companies are owned by the taxpayer, and the taxpayers as creditors are asking these companies to rein in compensation and … maximize the likelihood first and foremost that the taxpayers will get their money back,” Kenneth Feinberg told a House Oversight and Government Reform Committee hearing.

But, he added, “I do not believe, as the administration has stated elsewhere, that we should be micromanaging other companies in the private sector.”

Mr. Feinberg said he hopes that his recommendations to curb executive pay packets at the seven largest beneficiaries of the taxpayer bailout will encourage the rest of Wall Street to follow suit voluntarily.

“Hopefully with my recommendations, other companies on Wall Street and elsewhere will take to heart what I have suggested,” he said. “And hopefully the model that is created, in my report, will trickle and expand beyond these seven companies.”

Mr. Feinberg was appearing before the committee to discuss an order he issued last week to restrict pay at firms that took the most money from the $700 billion Troubled Asset Relief Program (TARP), set up by the Bush administration last year to avoid a meltdown of the U.S. financial system.

The cash pay of the top 25 executives at American International Group, Citigroup, Bank of America, General Motors, Chrysler and the financing arms of the two automakers will be slashed by 90 percent on average, and their stock compensation will be restricted so they cannot cash it in quickly.

Overall pay of the affected executives will average about half of what they earned last year.

Mr. Feinberg also said he rejected compensation plans by six of the seven companies because of “flaws” in their proposal. Only Chrysler Financial’s plan was accepted by Mr. Feinberg.