WASHINGTON |
WASHINGTON (Reuters) - The Obama administration's tough, but short-lived, crackdown on pay at the biggest U.S. banks will have little long-term impact, a bailout watchdog said in a report released on Thursday.
The report by the bipartisan Congressional Oversight Panel found that Ken Feinberg, the administration's "pay czar," was not transparent enough in his methods for slashing pay at the firms under his jurisdiction, including Bank of America and Citigroup.
The report says Feinberg achieved his core mission of limiting pay at the top bailout recipients.
But the findings undercut the "pay czar" legacy of Feinberg, who had said that while his mandate was limited, his rulings could be a blueprint for Wall Street firms.
"So long as compensation experts on Wall Street and elsewhere lack the information needed to use the Special Master's deliberations as a model, what seemed an opportunity for sweeping reform will be destined to leave a far more modest legacy," the panel found.
Feinberg, an arbitration lawyer who was appointed in June 2009 as the "Special Master for Compensation," has since become the administrator of the BP Plc's $20 billion fund to compensate victims of the Gulf of Mexico oil spill.
He did not immediately respond to a request for comment.
Treasury Department official Patricia Geoghegan has taken over the position of pay czar and still oversees executive payouts at AIG, General Motors, Ally Financial and Chrysler Group LLC, the automaker managed by Fiat SpA.
Other big financial firms escaped the government pay scrutiny when they repaid funds from the Troubled Asset Relief Program (TARP), and have since extended big raises to their executives.
Goldman Sachs revealed last month that it tripled Chief Executive Lloyd Blankfein's base salary and awarded him $12.6 million of stock, even after the bank's net income plunged last year.
Citigroup's board approved a base salary of $1.75 million for CEO Vikram Pandit. Pandit had vowed in 2009 to receive an annual salary of $1 until Citigroup returned to sustained profitability.
U.S. regulators are trying to institute long-term reforms at banks, including a proposal requiring executives at the largest financial institutions to have half of their bonuses deferred for at least three years. These reforms have paled in comparison to crackdowns abroad.
Britain on Wednesday finalized a torturous deal with banks on Wednesday, known as "Project Merlin," to curb bonuses and boost lending to business, although some critics charged it would be hard to enforce.
TREASURY DEFENDS PAY CZAR WORK
A Treasury official pushed back on the oversight panel's criticism, saying the office was charged with making sure pay practices at TARP recipients were in the best interest of taxpayers, not to serve as a model for future reforms.
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