Nearly three months after American International Group (AIG Quote) bonuses provoked an angry reaction in Congress, the Obama administration is ready to issue broad new principles on how to compensate top financial sector executives.
Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke want to give the Fed, which regulates banks, and the Securities and Exchange Commission, which oversees the financial markets, greater powers to set compensation guidelines across the financial sector.
The new regulations stem from legislation Sen. Christopher Dodd inserted as an amendment to the economic stimulus package earlier this year. The legislation affects companies that have received assistance under the $700 billion TARP. One of its provisions requires the Treasury secretary to seek reimbursement of any compensation paid to a TARP recipient’s top 25 employees if Treasury deems the payments contrary to the public interest. To undertake that review, the administration plans to retain Kenneth R. Feinberg, a lawyer who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks, according to people briefed on the selection.