The Obama administration has scrapped plans for salary caps at banks and other firms that receive government bailout money, reports the Wall Street Journal. But congressional limits on bonuses will remain in force, and the White House will still push for major changes to executive compensation. The double whammy of executive and legislative pay provisions had spooked Wall Street and pushed 10 banks to repay $68 billion in TARP money yesterday.
In a compromise to be announced as soon as today, Tim Geithner is expected to press financial companies, whether they received bailouts or not, to pay employees in restricted stock rather than cash, in order to encourage long-term stability. The administration will also announce today the appointment of a "pay czar" to oversee firms that have received the most public money.