The Treasury Department said Tuesday that it has hired Bank of New York Mellon Corp. as the prime custodian asset manager for the implementation of the $700 billion facility to purchase troubled assets from banks.

Bank of New York Mellon will assist the Treasury in custodial, accounting, auction management, and other infrastructure services to administer the purchase of the illiquid assets. The New York company will provide the accounting of record for the troubled asset portfolio, hold all its cash and assets, decide the pricing and asset value, and assist with other services.

The Treasury received 70 applications for the position; 10 of the applicants met the eligibility requirements.

Also Tuesday, the Treasury released details on executive compensation limits for participants in the government's rescue programs. The plan would restrict compensation policies for institutions participating in the Treasury's purchases of troubled mortgage-related assets, as well as those selling stock as part of the government's equity stake in the industry.

Under the guidelines, an institution that sells more than $300 million of troubled assets to the Treasury could not establish executive employment contracts that include so-called golden parachutes. The institution would face restrictions on tax deductions, including a prohibition against deductions for executives who receive more than $500,000.

The requirements for institutions selling shares to the Treasury are more stringent. The Treasury said they would have to ensure "that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution." Executives would also have to pay back bonuses or incentive compensation based on inaccurate information about the institution's performance.

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