Wall Street pay cuts ordered by Treasury
The Treasury Department is ordering pay cuts for top executives at the seven big companies that have yet to pay back government bailout cash. The US public has balked as such firms have handed out huge bonuses.
Washington's attempts to curb some high executive pay may represent profound government intervention in the decisions of private companies.Skip to next paragraph
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But given America's mood – with voters outraged at some huge Wall Street bonuses in the midst of recession – Thursday's actions by the Federal Reserve and the Treasury may have been inevitable. The Fed and Treasury will try to curtail compensation at firms where the US has leverage.
On Thursday, the Treasury Department announced that it is ordering the seven big companies that have yet to pay back government bailout cash to cut the total compensation for top executives in half.
Some individuals may see their pay package reduced by up to 90 percent. Lush perks like corporate jets and free country-club memberships may be out.
The pay cuts take effect next month. According to Treasury pay czar Kenneth Feinberg, the government did not want to make executives return compensation already received.
The firms in question are AIG, Bank of America, Citigroup, General Motors, GMAC Financial Services, Chrysler, and Chrysler Financial. They will be under the compensation caps until they pay back all the money that the government lent them under bailout programs.
"It does offend our values" when executives reap big pay after being rescued by the government, President Obama said.