Obama administration pay czar Kenneth Feinberg plans to review past compensation at 419 firms that received bailout funds, including JPMorgan, Goldman Sachs, according to a source close to the U.S. Treasury Department.
Feinberg will "look back" at any pay for the top 25 earners that totaled more than $500,000 from October 2008, when firms first received funds from the Troubled Asset Relief Program, though February 2009, when legislation was passed attaching pay restrictions to the funds.
That period includes the 2008 end-of-the-year bonus payments at Wall Street firms.
Feinberg will judge if any payments were "contrary to the public interest" and can request that individuals give money back. But he cannot force such repayments, the source said, speaking anonymously because the letters will not go out to firms until Tuesday.
Also on Tuesday, Feinberg will issue his rulings for the pay packages of the top 25 earners at the five firms that have received exceptional taxpayer assistance and have not substantially repaid the funds.
Those firms are AIG, General Motors, GMAC, Chrysler and Chrysler Financial.
Feinberg's latest move to look back at pay is a bold expansion of his review of pay, and could send a signal that Wall Street firms cannot return to big bonus payments without intense public — and governmental — scrutiny.
President Barack Obama appointed Feinberg — a Washington lawyer who previously oversaw the distribution of victims' funds from the September 11, 2001, attacks — in June 2009 after public anger exploded over high pay at bailout firms.
Discontent has continued to simmer as Wall Street profits and bonuses bounced back in 2009.
The New York State comptroller released a report last month showing that bonuses on Wall Street rose 17 percent last year to $20.3 billion.
Representatives from Goldman Sachs, JPMorgan and Morgan Stanley declined to comment about the letters set to go out on Tuesday. The 419 firms that will receive letters will have 30 days to give Feinberg the pay data, the source said.
The threshold was set at $500,000 to reduce the administrative burden for smaller firms that received TARP funds.
The source did not elaborate on how the pay czar's office will determine if a payment was not in the public's interest, but said the office will be looking at the size of the pay packages, the mix of cash and stock, and the circumstances of the payments.
Feinberg will try to renegotiate any payments deemed excessive, but has no power to file a lawsuit or issue a subpoena seeking repayment, the source said.
However, public exposure can be a powerful tool, as indicated by the slow but largely successful repayment of retention bonuses to former employees of AIG's Financial Products unit.
