Pay Czar: 17 Bailed-Out Banks Overpaid Execs

The Treasury Department's pay czar said Friday that 17 banks gave their top executives $1.6 billion in lavish payments while they were receiving billions of dollars in taxpayer-funded bailouts.

Kenneth Feinberg said he did not have the authority to ask the firms to repay the money that was handed out during the financial crisis. But he said they should develop new rules on compensation that would allow them to slash compensation payments in future crises.

"If the company's board of directors has identified that the firm is in a crisis situation, the compensation committee would have the authority to restructure, reduce or cancel pending payments to executives," according to a fact sheet Feinberg released.

Feinberg reviewed 419 companies that received bailout money before pay curbs were enacted by Congress in February 2009.

The review covered the period from October 2008 to February 2009. The starting point was when banks began receiving bailout money from the $700 billion Troubled Asset Relief Program. The ending point was when Congress enacted pay curbs on institutions receiving government support.

He determined that a total of $1.7 billion in payments were made during that period that would have violated the guidelines adopted later. And $1.6 billion of that amount was paid out by 17 of the country's largest financial institutions.

According to a New York Times report, the list of 17 banks includes JPMorgan Chase & Co., Goldman Sachs, American International Group and small lenders like Boston Private Financial Holdings.

Citigroup was expected to be singled out as one of the biggest offenders, according to the report.

Earlier, a JPMorgan spokeswoman declined to comment.

Until now, Feinberg's authority was limited to the seven companies that took the biggest bailouts: Citigroup Inc., Bank of America Corp., American International Group Inc., General Motors, GMAC, Chrysler and Chrysler financial.

His influence shrank as some companies repaid enough bailout money to escape his oversight.

Friday's announcement comes as Wall Street's most powerful banks face a raft of new regulations signed into law this week. One provision gives shareholders a chance to vote on proposed pay for executives of public companies. The votes won't be binding.

Separately, the Federal Reserve recently started monitoring pay at banks more closely. The goal is to prevent executives from reaping huge payouts if their decisions cause long-term losses for their companies.

Feinberg's clout in Washington grew this summer after he was appointed to administer the $20 billion fund set up by BP to compensate victims of the oil spill in the Gulf of Mexico.

Friday's review was likely to be Feinberg's final act before he leaves Treasury to focus full-time on the BP fund.