Three months after Merrill Lynch & Co. Inc.'s $3.6 billion of bonuses, Wall Street expects the federal government to loosen compensation caps for banks that received taxpayer aid, according to executives at four of the country's biggest financial firms.

Lenders such as Citigroup Inc. and Bank of America Corp. that obtained money from the Troubled Asset Relief Program have been waiting since February for Treasury Department guidance on the bonus caps for their 25 highest paid employees. Speaking on the condition of anonymity, the executives said the Obama administration may seek to substitute guidelines or otherwise ease the mandatory limits.

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