After much speculation about pay rules and hard pay caps on Wall Street, Obama has decided that various ideas he’d floated are too punitive. Much like the 180 on regulatory reform (the alphabet soup of bureaus will remain), you might chalk it up to the comeback in the financial sector.
The WSJ reports that rather than impose a $500,000 pay cap to firms that received “exceptional assistance,” the only rules they’d keep would be the relatively toothless ones on top executives passed by Congress. Congress limited bonuses to no more than one-third of compensation for very top executives, but it means lower employees can still get generous bonuses.
The big winner is Citi (C), which will likely be under strict government regulation for quite some time. There’s been a lot of concern that the bank would be hamstrung in its quest for talent — a concern that was probably pretty legitimate. Others affected include AIG, GM and GMAC.
The administration still plans to announce a “pay czar,” who will presumably pay close attention to compensation practices at all financial firms, not just the few mentioned above.
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