The Obama administration's pay czar told Congress that renegotiating executive salaries at American International Group Inc. is a "top priority," but that he would not seek to expand his authority to regulate pay at smaller financial institutions.
Kenneth R. Feinberg told a House oversight committee that he was taking a close look at approximately $200 million in bonuses that AIG is due to pay its top employees in 2010. The company came under fire earlier this year when it was reported that it would pay out $165 million in bonuses to employees of its financial products division.
AIG, which sustained heavy losses from imprudent bets on mortgage derivatives, got $68.9 billion in government assistance under the Troubled Asset Relief Program and has received nearly that much through other aid programs. As one of the top seven recipients of bailout money, the firm is subject to Feinberg's oversight.
Feinberg's legal authority to renegotiate compensation, however, is limited to employment contracts drafted after bailout aid was accepted. In his testimony, he said that he had already had success in getting "almost all" firms to voluntarily lower previously agreed upon contracts, the Washington Post reported. He said he expected similar success with the pre-existing AIG retention bonuses.
In his testimony, Feinberg also rejected suggestions by some members of Congress that he ask for extended authority to oversee compensation across the banking sector. He said that the large sums expended by taxpayers to bail out the seven largest firms justified his interference, but that he was "wary of exceeding his mandate," the Wall Street Journal reported.
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