Banks could still find wiggle room in pay caps

Financial Crisis Posted on

The squeeze on big paydays for executives of bailed-out banks will probably leave Wall Street plenty of wiggle room. Consultants on executive pay say the caps imposed by President Barack Obama on Wednesday will probably apply only to a few executives - not star traders, brokers and salespeople who routinely earn whopping pay packages.

Others note Wall Street typically finds ways to exploit loopholes and figure this time will be no different.

"You've got a lot of people on Wall Street who are not executives but still make extremely big salaries," said Mark Borges, a principal at compensation consulting firm Compensia Inc. "I suspect this doesn't impact them at all."

The new rules require banks that receive "exceptional assistance" from the government to cap salaries, including cash bonuses, at $500,000 for senior executives.

If those firms wanted to pay their executives more, they would have to use stock that couldn't be sold until the bank had repaid the bailout money. The rules apply only to the future, not to banks that have already received bailout money.

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