The threat of heightened regulation on executive pay and employee bonuses sparked a frenzied move by the industry to do whatever it could to repay its TARP funds--the idea being that only TARP banks would be subject to such regulation. Well, guess again. The latest is that the Obama Administration is planning to require banks that received TARP funds (in two rounds) to submit any major changes to executive pay to a federal regulator. According to the New York Times, this person is Kenneth Feinberg. He was tasked previously with overseeing payouts to the families of the victims of the 9/11 attacks.

This is a bombshell, folks. People will no doubt be shocked by the appointment of a pay czar. Many thought the issue would fade once the TARP funds were paid backed. This takes the controversy to a whole new level. I doubt the industry will take it easily. As of now, the law will allow the czar to force a bank to re-draw its compensation plan if he deems it encourages risky activity, like betting the firm on the subprime industry.

For more:
- here's the article

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