House Speaker Nancy Pelosi (D-CA) and House Financial Services Chairman Barney Frank (D-MA) sent a letter to Treasury Secretary Timothy Geithner urging the Administration to ensure that executive pay at companies that received bailout dollars is not being rewarded at the expense of taxpayers. The letter, sent on August 12, expresses concern over recent reports that several companies that received substantial government assistance plan to distribute $32 billion in bonuses despite owing the government and taxpayers more than $200 billion.
The Speaker and Chairman Frank requested that Kenneth Feinberg, the Obama Administration’s new executive compensation watchdog, take steps to guarantee that executive compensation packages are not excessive, although they did not define “excessive” with an actual dollar amount. Feinberg is expected to begin his review of seven bailout recipients’ executive pay packages this month, with those companies due to submit compensation plans today.
The letter stated, “Congress and taxpayers alike are rightly alarmed that companies would enrich their executives while deferring repayment of the federal financial assistance that helped them avoid financial catastrophe.”
This outcry from House leaders comes on the heels of recently passed legislation (H.R. 3269) that would expand regulatory oversight of executive compensation and give shareholders a bigger say in what corporate executives are paid. H.R. 3269 passed the House as a stand-alone measure before the beginning of the August recess, while the Senate plans to act on a similar measure as part of its larger financial regulatory overhaul this fall.