U.S. close to decision on exec pay

The Treasury Department may release as early as next week its long-awaited ruling on how to limit pay for executives at firms bailed out by the federal government, two sources familiar with the deliberations said.

Justice Department lawyers are currently reviewing the proposed limits.

Executive compensation is a delicate political issue for the Obama administration. Officials are seeking to address widespread anger over lavish Wall Street pay without discouraging firms from taking public money as part of the government’s efforts to rescue the financial system.

It became necessary to issue new guidance on the compensation limits after Congress attached a new set of pay restrictions to the $700-billion financial rescue package in February. Administration attorneys are trying to reconcile the new rules with earlier guidelines and to explain to firms how to apply the requirements.

One source said the government probably would set tighter limits for companies that took a significant amount of federal assistance. But senior Treasury officials have said that they do not want to put restrictions on firms that volunteer to participate in the financial rescue programs.

Uncertainty over the executive pay limits has slowed some bailout initiatives. The issue undercut a $15-billion program intended to free up credit for small businesses. No major small-business lender participated out of concern over pay limits and other restrictions.