The Treasury Department extended its review of executive compensation practices on Tuesday beyond those that received "exceptional" assistance to all recipients of rescue capital.
Kenneth Feinberg, special master for executive compensation, sent a letter to the 419 Troubled Asset Relief Program recipients and requested the banks' compensation practices for their top 25 executives. The so-called look-back must be conducted within 30 days.
Feinberg will determine whether any compensation was "consistent with the public interest." If he concludes it was not, he will attempt to negotiate for reimbursement to the government.
Feinberg acknowledged, however, he lacks the power to compel action from banks.
"I have no enforcement authority for this look-back," he said at a press conference announcing the letter. "If we find that there is a compensation decision that was made by one or more of those companies that is inconsistent with the public interest. … I can't file a lawsuit. I can't subpoena an records. I can't demand an investigation. All I have under law is the bully pulpit to make sure that we make the effort."
Feinberg's review of compensation so far has been confined to those companies that received "exceptional" bailout assistance. Only two banks — Bank of America Corp. and Citigroup Inc. — fell into that category, but both repaid their Tarp money before Feinberg had examined their practices. This new mandate would allow him to look at those institutions and others, including JPMorgan Chase & Co., Goldman Sachs and Morgan Stanley.
For community banks that received Tarp money, Feinberg said he is requesting information only on payments to executives who earned more than $500,000.
