WASHINGTON (AP) -- The Treasury Department on Thursday ordered seven companies that accustomed billions of dollars in government bailouts to bisect total advantage for their top executives. But the big reductions will not apply to pay becoming before November.
Kenneth Feinberg, the Treasury official arch the pay review, told reporters that boilerplate salaries for the top 25 admiral are being cut 90 percent starting next month.
The action will apply to the top admiral at Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors, GMAC, Chrysler and Chrysler Financial.
Meanwhile, the Federal Reserve unveiled a proposal Thursday that would police banks' pay behavior to ensure they don't animate advisers to take reckless gambles like those that contributed to the banking crisis.
Unlike the Treasury plan, the Fed proposal would awning bags of banks, including abounding that never accustomed a bailout. But the central coffer would not absolutely set compensation. Instead, the Fed would review - and could veto - pay behavior that could cause too abundant risk-taking by executives, traders or accommodation officers.
The government did not appetite to make admiral return advantage already accustomed this year, but the bargain pay levels will be the base for making decisions on salary in 2010, Feinberg said.
The admiral will still be subject to advantage limits as long as their companies are accepting abutment from the government's $700 billion bailout fund. Their total advantage was being cut in half, on average.
Cash salaries will be limited to $500,000 for added than 90 percent of affe! cted emp loyees. Personal costs for such allowances as aggregation autos and corporate jets will be capped at $25,000 without approval from Feinberg's office for college payments.
Feinberg got the job as pay czar earlier this year when Congress, responding to outrage about huge bonuses being paid to AIG, adapted the bailout law to crave that controlling advantage at companies accepting exceptional abetment be curbed.
He has been reviewing advantage bales since August and called abounding of the negotiations "intense."
Speaking earlier at the White House, President Barack Obama welcomed Treasury's decision and said Americans' ethics are offended by boundless paychecks for admiral whose companies were bailed out by taxpayers. He urged Congress to pass legislation to accord shareholders a articulation in controlling pay packages.
"It does affront our ethics when admiral of big banking firms that are struggling pay themselves huge bonuses alike as they await on extraordinary abetment to stay afloat," Obama said.
Treasury Secretary Timothy Geithner additionally praised the outcome of Feinberg's deliberations.
"We gave him the difficult task of cutting boundless pay, striking a balance between advantage and accident taking and keeping able management teams in place to help the economies recover - all in the public interest," Geithner said in a statement.
Smaller companies and those that accept repaid the bailout money, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., are not affected by the plan.
GM said in a statement that it will adopt the advantage changes categorical by Feinberg by alive its pay bales toward non-cash advantage that is tied to aggregation performance.
"Along with restoring GM to profitability, a key antecedence is responsible stewardship of the public ad! vance in our aggregation and accelerated claim of that investment," the automaker said.
Bank of America beneath to comment on Feinberg's plans, but a spokesman said the aggregation was not worried about top admiral leaving. "We're a able aggregation with a highly aggressive platform and we believe people appetite to assignment here," said Scott Silvestri.
Chrysler Group LLC CEO Sergio Marchionne and other Fiat admiral who assignment for both Chrysler and Fiat were exempted from the pay cuts as part of the agreement with the U.S. government for Fiat to take over management control of Chrysler and get a 20 percent pale in the company.
Executives who assignment solely for Chrysler could be affected, but abounding of the top earners under Chrysler's above owner accept left the aggregation including above CEO Robert Nardelli and above Vice Chairman Tom LaSorda. Deputy CEO Jim Press additionally is about to leave the company.
Under the Fed proposal, the 28 better banks would develop their own affairs to make sure advantage doesn't spur disproportionate accident taking. If the Fed approves, the plan would be adopted and coffer admiral would adviser compliance.
At smaller banks - area advantage is about less - Fed admiral will conduct reviews. Those banks don't accept to abide plans.
The Fed refused to analyze the 28 banks that will accept to abide plans. But Citigroup, Bank of America and Wells Fargo & Co. are usually included on such lists. Nearly 6,000 banks regulated by the Fed would be covered.
"The Federal Reserve is working to ensure that advantage bales appropriately tie rewards to longer-term achievement and do not create disproportionate accident for the firm or the banking system," said Fed Chairman Ben Bernanke.
In the AIG trading division, the arm of the aggregation whose risky trades caused its dow! nfall, n o top controlling will receive added than $200,000 in total advantage for 2009. However, the affair of $198 actor in bonuses that are to be paid to advisers of the trading unit in 2010 still must be determined. The government has said it will push to see those bonuses reduced.
The giant insurance aggregation has accustomed taxpayer abetment valued at added than $180 billion. AIG assembly beneath to comment Thursday.
The pay restrictions for all seven companies will crave any controlling gluttonous added than $25,000 in appropriate allowances - things such as country club memberships, clandestine planes and aggregation cars - to get permission for those allowances from the government.
Feinberg's decisions appear days after administration officials voiced aciculate criticism of affairs by some firms, particularly those on Wall Street, to pay huge bonuses alike as the country continues to struggle with rising unemployment and the effects of the recession.
Goldman Sachs, which has paid back its bailout money, has said it appropriate $16.7 billion for advantage so far this year, added than $500,000 per employee. Citigroup is advantageous $5.3 billion in bonuses to its advisers and Bank of America $3.3 billion.
Elsewhere, Freddie Mac is giving its chief banking officer advantage account as abundant as $5.5 million, including a $2 actor signing bonus. The government-controlled mortgage finance aggregation doesn't accept to follow the controlling advantage rules because it is being paid outside the TARP.
Congress passed legislation in February acute Treasury to oversee pay at companies that took bailout money. Treasury created the pay czar's office in June as one agency of implementing that law.
Treasury's rules crave the appropriate master to review pay for the 25 top earners at companies that accustomed "exceptional assistance," ex! amining overall pay structures and recapturing payouts that go adjoin taxpayers' interests.
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Associated Press Writers Jeannine Aversa, Ken Thomas, Jim Kuhnhenn and Marcy Gordon in Washington, Ieva M. Augstums in Charlotte, N.C., and Tom Krisher in Detroit contributed to this report.
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