Kenneth Feinberg, 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. - AP

Pay czar criticizes rescued banks' bonuses

WASHINGTON — The Obama administration's pay czar on Friday came to the same conclusion about fat Wall Street bonuses that some average Americans already have reached: There's no logic behind them, except greed.

But he stopped short of demanding a refund of $1.6 billion for the most egregious payments handed out to executives by banking firms bailed out by the government during the height of the financial crisis, saying such an action could invite lawsuits.

Still, the findings sparked outrage from some in Congress, renewed calls for reining in Wall Street compensation and raised the prospect of re-energized efforts to impose hefty taxes on such bonuses.

The report found that bonuses and other payments to executives at Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and 13 other financial firms were "ill-advised," said Kenneth R. Feinberg, the special master for executive compensation under the $700 billion Troubled Asset Relief Program.

The payments — more than $10 million in addition to generous annual salaries for some — came as many of the 17 firms suffered huge losses in late 2008 and early 2009.

President Barack Obama said the "lavish bonuses" highlighted the need for provisions in the recently enacted financial regulatory reform that address executive compensation, such as giving shareholders a nonbinding say-on-pay vote. Those provisions take effect as financial regulators have increased scrutiny on pay incentives that encourage excessive risk-taking.

"There's simply no justification for multimillion-dollar bonuses that are paid out to people who were irresponsible," said Rep. Peter Welch, D-Vt., who this year proposed legislation levying a tax on bonuses of more than $50,000 at TARP recipients.

Welch hopes the report will help build support for his legislation. He also circulated a letter to his House colleagues Friday to be sent to six banks that have not repaid their TARP money, asking that they suspend bonuses until they do and refund the money to taxpayers.

Feinberg said among the reasons the companies gave for handing out huge checks, even as the financial system was crashing around them, were loyalty, competition with other firms and severance payments for "jobs well done."

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