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Pay Czar Unlikely to Demand Cuts at Small Banks

Kenneth R. Feinberg, the Treasury Department's special appointee for executive compensation.
AP
Kenneth R. Feinberg, the Treasury Department's special appointee for executive compensation.

Federal pay czar Kenneth Feinberg said he is unlikely to recommend pay cuts for senior executives at hundreds of smaller banks that received TARP bailout money.

This is the first time Feinberg has said compensation at smaller banks is likely to emerge unscathed from his review. He will spend the next three weeks scrutinizing the pay plans at some 400 smaller TARP banks.

"I haven't asked" any smaller banks for any pay cuts or refunds, he told CNBC while attending a conference at the New York Stock Exchange. "And, frankly, I don't think I will."

Feinberg said he has legal authority to reduce pay only for the top 175 officials among the seven biggest companies that got billions in TARP. Only four of firms those still haven't repaid the bailout money: AIG , the former GMAC, General Motors and Chrysler.

But Congress also has asked him to play an advisory role in reviewing pay at 400 or so much smaller local and regional banks that also took TARP cash.

He is to "seek and negotiate reimbursement" in cases where he views the compensation schemes as "contrary to the public interest," he said.

When asked if a bank executive's salary in Idaho had anything to do with the national public interest, however, he replied that it doesn't. That is why Feinberg doesn't expect to meddle in the local banks' compensation plans, he said.

Technically, small-bank executives could ignore the pay czar's suggestions, but it would be difficult to do so amid the widespread bashing of banks over the financial crisis.