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 Some of the executive compensation limits
in the $787 billion stimulus package President Barack Obama will sign
Tuesday are not sitting well with him, but he has few options
to undo what Congress has passed. The White House opposed language authored by Senate Banking Committee Chairman Chris Dodd, D-Conn., requiring that the top earners in companies receiving federal bailout funds collect no more than one-third of their compensation in the form of bonuses. At firms taking a half-billion dollars or more in federal aid, the limits apply to the top 25 earners. Fewer employees are covered at smaller banks taking part in the so-called Troubled Asset Relief Program, or TARP. According to Politico's Josh Gerstein, White House officials are concerned that the new compensation limits, some of which are to be applied retroactively, could spook smaller banks, prompting them to opt out of participating in the program.
And since the provision was inserted, bankers and compensation experts
expressed fear there will be an exodus of talent as the most qualified
executives leave troubled firms at a time when they are most needed.
However, that argument didn't dissuade Dodd, who said last week that
"there are many qualified replacements" for Wall Street executives who
quit. "Some very high earners will have to adjust compensation
expectations and maintain a different sense of proportion than in the
past," Dodd said in a Feb. 14 statement.
The administration reportedly had decided not to fight the issue of executive pay in the stimulus plan because of the possibility that it would have to go back to Congress for more bailout funds. Gerstein writes that if Obama wants to tackle the issue, he has some options: Option One: Sign the bill but add a signing statement.
When Obama signs the stimulus legislation Tuesday, he could add a written statement saying he objects to the executive compensation provision and won't enforce it. This was a favored tactic of President George W. Bush but also one that drew fire from Bush's critics, including candidate Obama, who last May said, "We're not going to use signing statements as a way of doing an end run around Congress." A White House official said Monday that Obama would not issue a signing statement. Option Two: Water down or slow the limits through regulations. Under the legislation, [Treasury Secretary Timothy] Geithner will have to issue standards to implement limits the bill imposes on executive compensation. Treasury could use those regulations to try to scale back some of the limits, but language in the legislation would seem to make that difficult. Treasury also could drag its feet in issuing the rules, but lawyers said they expect firms that receive TARP assistance to view themselves as covered by it immediately. Option Three: Ask Congress to revise the limits. White House press secretary Robert Gibbs hinted at this solution on Sunday. Another White House spokeswoman, Jen Psaki, pointed in the same direction: "Obama looks forward to working with Congress to responsibly address this issue." But it's far from clear that congressional leaders want to revisit the issue. In fact, House Financial Services Committee Chairman Barney Frank indicated Sunday that the prospect for additional aid to the financial system is linked in the public eye to a crackdown on perceived Wall Street excesses. Senior White House aide David Axelrod told Fox News on Sunday that the president might take a second look at the provision and work with Congress on "an appropriate approach. We all have the same goal. ...We want to do something that's workable," he said. - Donna Block See story from Politico See a list of the limits from Dealscape Categories Deal Video
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