The Obama administration sure likes a good czar. The latest one that should send shivers up Wall Street’s spine: a ‘pay czar’.
Their job would be to ensure that companies which have received help from the government follow appropriate guidelines.
The position, says WSJ, will go to Kenneth Feinberg, who previously handled compensation for the families of 9/11 victims.
Mr. Feinberg is expected to focus on pay restrictions related to firms receiving TARP bailout funds, helping companies to interpret the rules and ensure that they are being followed.
For instance, companies have been confused about whether to pay 2008 bonuses, since restrictions on incentive pay didn’t go into effect until early 2009. Some firms have made the payments while others have held off. Many firms are also unsure whether the “top earners” targeted by Congress include rank-and-file employees or just executives.
Mr. Feinberg will report to Treasury Secretary Timothy Geithner, but he is expected to have wide discretion on how the rules should be interpreted. Firms likely won’t be able to appeal decisions that Mr. Feinberg makes to Mr. Geithner, according to people familiar with the matter.
The part about having broad discrition that can’t be appealed is what makes the position a ‘czar’ apparently. Of course, having clarity over rules is a good thing. Though ultimately, this may just apply to a handful of companies, namly Fannie Mae, Freddie Mac, AIG, Citigroup, GM and Chrysler, assuming everyone else gets around to buying the government out.