Executive pay: How much say should Obama 'czar' have?
High executive pay and bonuses are unseemly after taxpayer bailouts, many Democrats charge. But GOP lawmakers worry about federal 'pay czar' meddling in the workings of capitalism.
Kenneth Feinberg, Special Master for TARP Executive Compensation, waits to testify on Capitol Hill in Washington, Wednesday, before the House Oversight and Government Reform Committee.
Susan Walsh/AP
The question of Wall Street pay has opened a partisan rift over the role of government in setting private-sector salaries.
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When federal “pay czar” Kenneth Feinberg testified before Congress Wednesday, Democratic lawmakers focused on what they see as greed and irresponsibility by executives who continue to reap millions in pay after taxpayer bailouts. Republicans expressed worry about overreach by the government itself – warning about unintended consequences of a big-bonus backlash.
Given public concern about both the behavior of Wall Street and Washington policymakers, it’s a debate that’s unlikely to end with Mr. Feinberg’s stoic answers.
Extraordinary measures
It’s extraordinary, after all, for an appointee of the US Treasury to take direct control of compensation practices at some of America’s largest private companies. Feinberg is a “special master” on pay at seven firms, ranging from AIG to Bank of America, because they are getting extraordinary government support.
“Wall Street can no longer be trusted to control itself,” said Edolphus Towns (D) of New York, who chairs the House Oversight and Government Reform Committee. “No doubt there is howling in the executive suites, but I don’t think the taxpayers are going to be shedding any tears over this.”
But Darrell Issa of California, the top-ranking Republican on the committee, worried aloud that government pay caps could create problems, even with a good motive of protecting taxpayer interests. He cited reports of some high-level departures from bailed-out firms, which include automakers General Motors and Chrysler as well as large banks.
“Ford is doing better and Ford is innovating,” Representative Issa said. “Are you concerned they will hire the best and brightest [from GM and Chrysler]?”
'Pay czar' seeks a balance
Feinberg said he is trying to strike a balance on these issues, as his statutory mandate calls for. His top priority, he said, is to foster a pay environment that will give the firms the best chance of repaying the taxpayer bailout money. This means retaining needed talent, he said, but also watching out for taxpayers by curbing excesses in areas such as bonuses and perks.
