Obama is Czar of the Czars - enough with the Czar crap!

from The Wall Street Journal
By Deborah Solomon
JUNE 5, 2009

White House Set to Appoint a Pay Czar

WASHINGTON -- The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter.

The administration is expected to name Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said.

Mr. Feinberg's appointment could be announced as early as next week, when the administration is expected to release executive-compensation guidelines for firms receiving aid from the $700 billion Troubled Asset Relief Program. Those companies, which include banks, insurers and auto makers, are subject to a host of compensation restrictions imposed by the Bush and Obama administrations and by Congress.

Wall Street has been anxiously awaiting more details on how the rules will be applied. "The law is confusing and a bit ambiguous, and so we're looking for certainty as to how to structure pay incentives," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a trade association.

The move comes amid a series of sometimes-overlapping efforts to curb pay at financial firms following perceived industry excesses that led to the lending boom and bust.

The Obama administration earlier this year issued guidelines that include limiting salary for top executives at some firms receiving TARP funds and requiring that additional pay be in the form of restricted stock, vesting only after the company repays its debt, with interest, to the government. Congress then chimed in with even tougher rules curbing bonuses for top earners at firms receiving TARP money. As part of that effort, lawmakers barred those firms from paying top earners bonuses that equal more than a third of their total compensation.

The White House has been wrestling with how to marry those two efforts, which in combination are more punitive than administration officials had intended.

The government is also pursuing a separate revamping of financial-sector rules that could change industry compensation practices more broadly. For instance, the Federal Reserve is considering rules that would curb banks' ability to pay employees in a way that would threaten the "safety and soundness" of the bank.

Mr. Feinberg is expected to focus on pay restrictions related to firms receiving TARP bailout funds, helping companies to interpret the rules and ensure that they are being followed.

For instance, companies have been confused about whether to pay 2008 bonuses, since restrictions on incentive pay didn't go into effect until early 2009. Some firms have made the payments while others have held off. Many firms are also unsure whether the "top earners" targeted by Congress include rank-and-file employees or just executives.

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“ Obama is establishing a new cabinet of officials who are accountable only to him. This is an unprecedented power grab." - Kathryn Reagan

Mr. Feinberg will report to Treasury Secretary Timothy Geithner, but he is expected to have wide discretion on how the rules should be interpreted. Firms likely won't be able to appeal decisions that Mr. Feinberg makes to Mr. Geithner, according to people familiar with the matter.

Mr. Feinberg, founder and managing partner of the law firm Feinberg Rozen LLP, spent several years overseeing payouts totaling more than $7 billion to victims of the 9/11 attacks. He personally reviewed every claim, approving or denying awards and allocating sums to be paid out of the Treasury.

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