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Bank of America's Ken Lewis takes pay cut, but no one follows

Although CEO Ken Lewis agrees to a $0 pay package, don't expect a wholesale revolution in executive compensation on Wall Street.

By Staff writer / October 16, 2009

In this Sept. 15, 2008 file photo, Bank of America Chairman and CEO Ken Lewis listens during a news conference in New York. Bank of America Corp. said Friday that it lost more than $2.2 billion in the third quarter as loan losses kept rising, providing further evidence that consumers are still struggling to pay their bills.

Bebeto Matthews, file/AP/FILE

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Nudged by the Obama administration, at least one of America's top bankers is taking a big pay cut this year. Kenneth Lewis, CEO at Bank of America, will get a salary and bonus totaling zero.

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That doesn't mean, though, that a wholesale revolution in Wall Street pay is under way.

Not in a hurry, at least.

Mr. Lewis agreed to the $0 pay package based on a recommendation by Kenneth Feinberg, President Obama's "pay czar" for bailed-out firms. In coming days, Americans will learn more about whether Mr. Feinberg will ratchet down pay levels at some other big companies. But his official powers are limited to seven firms that received special bailouts from the federal government: Bank of America, AIG, Citigroup, General Motors, Chrysler, GMAC Financial Services, and Chrysler Financial.

Beyond that, some signs suggest that it's back to business as usual when it comes to pay.

This week Goldman Sachs, the richest Wall Street firm, said its compensation totaled $5.4 billion in the third quarter. That works out to about $170,000 per employee, on average, for those three months. According to The Wall Street Journal, major US banks and securities firms are on course to pay a record $140 billion this year in compensation.

This is not sitting well with some investors and voters.

"How is it possible that the year after billions of taxpayers' dollars helped companies like Goldman Sachs return to financial health, this company shows absolutely no restraint?" Laura Berry, executive director of the Interfaith Center on Corporate Responsibility, said in a statement this week. "As prudent investors, we have a responsibility here to act as the conscience of Wall Street, especially when it fails to do so on its own."