WASHINGTON — Sen. Claire McCaskill, D-Mo., introduced legislation Friday that would impose salary caps on executives at financial firms receiving bailout funds from the federal government.
The legislation would cap any employee compensation at the level of the president's salary. The president earns $400,000 a year, not including benefits.
The private-sector limit would include salary, bonuses and stock options and would last as long as the firm relies on federal government assistance.
President Barack Obama has pledged to place limits on executive compensation as a condition of firms receiving federal government assistance under the second $350 billion tranche of the Troubled Asset Relief Program, or Tarp.
That commitment was outlined in a letter sent to Congress by White House economic adviser Lawrence Summers shortly before the Senate voted to release the Tarp money to the Treasury earlier this month.
Summers said that any compensation above a "specified threshold" would have to be paid in stock that could not be liquidated by the individual until any public money was repaid to the Treasury.
Summers is the head of the National Economic Council.
The administration hasn't said what the threshold would be.
A spokeswoman for the Treasury wasn't immediately available to comment.
Maria Speiser, McCaskill's press secretary, said the senator doesn't believe the pledge from the Obama administration goes far enough to place limits on executive compensation and thinks legislation is required.
News that banks receiving the lion's share of the first $350 billion in Tarp money paid out billions in bonuses to executives at the end of last year sparked outrage by lawmakers of both parties.
"Right now they're on the hook to us," McCaskill said on the Senate floor while introducing the bill. "And they owe us something other than a fancy waste basket and $50 million jet."
McCaskill was referring to a since-abandoned plan by Citigroup Inc. to purchase a new $50 million corporate jet and the $1.2 million spent by former Merrill Lynch Chief Executive John Thain to redecorate his office in late 2007. The redecoration included a $1,400 waste basket.
Shortly after news of the office renovation was made public, Thain was fired by Bank of American Corp. (BAC), which acquired Merrill Lynch last year.
Citigroup has been among the largest recipients of taxpayer money, having been given $45 billion and a federal government guarantee on around $300 billion in toxic assets.
Bank of America also received $45 billion, and guarantees for $118 billion in bad assets.