White House to Cut Pay of 7 Bailed Out Firms Up To 90%

October 21, 2009

(ChattahBox)—With the recent uproar over the announcement of a new round of extravagant Wall Street bonuses that exceed those handed out for the past two years, the White House has finally issued some stern measures to clamp down on the excesses of firms receiving federal bailout funds.

Kenneth R. Feinberg, the special master at Treasury tasked with handling bailed out firms’ compensation issues, will soon issue orders for the significant reduction of the compensation of top executives of seven Wall Street firms receiving the most taxpayer funds.

According to the New York Times, the top seven firms that received the most bailout money must reduce the cash payouts to their 25 highest paid executives by an average of about 90 percent from last year. The cash would be replaced with company stock for many executives, but they will be restricted from selling it immediately.

The pay cut doesn’t end at the top executive suite. The plan also calls for the reduction by about 50 percent of the total compensation of all executives, which includes bonuses.

The seven companies affected by the new compensation rules are, Citigroup, Bank of America, the American International Group, General Motors, Chrysler and the financing arms of the two automakers.

The so called pay czar also has his eyes on extravagant executive perks:

“And at all of the companies, any executive seeking more than $25,000 in special perks — like country club memberships, private planes, limousines or company issued cars — will have to apply to the government for permission.”

A.I.G., which rode the wave of exotic financial instruments cooked up by its financial products division, right into financial collapse, will have additional compensation orders to follow. Top executives working in the disgraced division can’t receive more than $200,000 in total compensation.

Additionally the White House will issue a stern warning to “…A.I.G. that it must fulfill a commitment it made to significantly reduce the $198 million in bonuses promised to employees in the financial products division.

Feinberg was appointed by Treasury Secretary Timothy F. Geithner to implement a new law granting the Treasury the authority to examine and order reductions of the salaries and bonuses for the five most-senior executives and their 20 most highly paid employees at companies that have received significant bailout funds.

The fleshed out compensation schedules set by Feinberg will be released in the next few days by the Treasury Department.


Comments

3 Responses to “White House to Cut Pay of 7 Bailed Out Firms Up To 90%”

  1. Rob Quinn on October 21st, 2009 8:20 pm

    The government stole our money through taxes and used it to purchase
    control of big banks.

    Big government already had indirect control of banks through the Fed,
    Fannie&Freddie, and policies such as “Too Big To Fail” – all of
    which led to the economic collapse.

    Now the control is no longer indirect. Washington now directly
    controls banks.

    Washington should have let bad banks fail instead of giving them your
    money and then nationalizing them.

    Of course, most people don’t care Obama took their money and gave
    it to the banks, they’re just upset that the banks took it and made
    profits.

    Apparently stealing and then giving away blood money is fine, but
    legally accepting it is bad.

  2. Christopher on October 22nd, 2009 12:15 am

    How does the government intend to keep these businesses competitive when the top business minds in these particular companies will move elsewhere to get properly compensated for their efforts. Altruism is fine in fantasy land, however we are dealing with the harsh reality of a competitive business environment that is going to see the energy and intellect of these companies stripped dry.

  3. Obama: TARP Firms Paying Huge Bonuses ‘Does Offend Our Values’ | ChattahBox News Blog on October 23rd, 2009 1:29 am

    […] promised yesterday by the Treasury Department and Kenneth Feinberg, the special master for compensation, further details and limitations on […]

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