New York (HedgeCo.Net) – Financial institutions that have received generous assistance from Congress may be forced to restrict executive compensation and their dividends, if Barack Obama and his new Treasury have their way.
“Those receiving exceptional assistance will be subject to tough but sensible conditions that limit executive compensation until taxpayer money is paid back,” said Larry Summers, who Obama chose to head the White House National Economic Council. He also said they would ban dividend payments beyond the minimum amounts while putting limits on stock buybacks.
Obama has expressed his disappointment with the current administration and the lax oversight in doling out the first $350 billion of the bailout, along with failing to focus on areas like housing and consumer credit. Summers tackled the subject in a letter to Congress yesterday that outlined the issues Obama supports in distributing the other half of the $700 billion Troubled Asset Relief Program.
Summers told Congress that the President-elect believes there has been “too little transparency and accountability,” among the financial institutions. In addition, Obama believes the executives acted irresponsibly and did not provide enough support for small-businesses owners. Small businesses and community banks are where more of the money needs to be directed, Obama says.
In addition, he wants to provide help to struggling homeowners in order to avoid foreclosure, along with providing enhanced oversight of the relief program which includes public accounting to see how the money is being spent.
The House of Representatives will vote on a proposal this week that include some of the restrictions outlined by Summers.
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