Obama Aide Says ‘Process’ Needed to Deal With Executive Pay

Feb. 17 (Bloomberg) -- The Obama administration is reviewing how to reconcile its plan to limit executive pay with tougher rules called for in the new economic stimulus law, White House press secretary Robert Gibbs said.

“A process has to be figured out” for resolving the issue, Gibbs told reporters today on Air Force One without elaborating.

Gibbs made his comment after President Barack Obama signed into law the $787 billion stimulus package during a stop in Denver. One of the law’s provisions will force the top five executives at banks that get at least $500 million of federal bailout funds, and the 20 most highly paid employees at those firms, to forgo cash bonuses, according to an analysis by the Washington-based government-relations practice of Blank Rome LLP.

The bankers can get stock bonuses, as long as the stock is restricted until their employer repays bailout funds, according to the law firm.

Treasury Secretary Timothy Geithner and Obama economic adviser Lawrence Summers unsuccessfully sought to prevent Senator Christopher Dodd, a Connecticut Democrat and head of the Senate banking committee, from adding to the stimulus package the measures that are stricter than those proposed by the administration.

The law’s restrictions are on top of the $500,000 salary cap that the U.S. Treasury said it would impose on banks that require additional government assistance from the Troubled Asset Relief Program, or TARP.

The administration won’t seek additional legislation on executive pay, Gibbs said. “We will work with Congress to ensure that what the president proposed, and what is now law, works to share the goal of ensuring that pay isn’t excessive for CEOs,” he said.

Scott Talbott, vice president for government affairs at the Financial Services Roundtable, a Washington trade group that lobbies on behalf of banks, said yesterday that limits in the stimulus plan may backfire by making banks in need of aid less likely to seek it.

The administration will work to make sure that new rules don’t dissuade “smaller community banks” from participating in the TARP program, Gibbs said.

He stressed the “incredible amount of agreement” between Congress and the administration on efforts to curb executive pay. The congressional restrictions on salary and bonuses “shares a lot on common” with Obama’s outlines, including limits on luxury expenses, he said.

To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net; Roger Runningen traveling with the president at rrunningen@bloomberg.net.

To contact the editor responsible for this story: To contact the editor responsible for this Jim Kirk at jkirk12@bloomberg.net