Pay Czar Off Base With Wells Fargo Criticism

SAN FRANCISCO (TheStreet) -- An official's criticism of Wells Fargo compensation practices on Thursday casts the federal government as more of a loan shark than a lender of last resort.

The opprobrium came from Kenneth Feinberg, who has been assigned the task of reviewing pay practices at bailed-out companies by President Obama. Feinberg, who Obama has referred to as the administration's "pay czar," told CNBC he believes the $21.3 million that Wells CEO Stumpf received last year was too high.

Feinberg also said that while he only has jurisdiction over General Motors, GMAC>, Chrysler, Chrysler Financial and American International Group(AIG) -- not firms like Wells, which paid back TARP funds last year -- that all U.S. companies should adopt his model of small cash salaries, with stock incentives that can be cashed in over a lengthy period of time.

"Even though Wells Fargo is not on my watch and I have no jurisdiction over Wells Fargo, it's certainly the size of that compensation raises serious questions," said Feinberg. "...These companies should voluntarily look at what I'm mandating for these five companies and adopt voluntarily the prescriptions that they think would be useful in their own peculiar situation."

Feinberg insisted that he didn't believe the United States ought to be doling out compensation prescriptions to private, independent companies. But he failed to acknowledge that appearing on CNBC to criticize Wells Fargo could be considered inappropriate. Whether one agrees with Stumpf's sizable pay package or not, there's little doubt that the government is applying pressure by publicly lambasting the company and its CEO.

Wells Fargo was a begrudging participant in the TARP program, and executives appeared to have difficulty biting their tongues when asked about the virtues of government plans to repair the financial sector. Once TARP funds were pushed down its throat, the bank refused for several months to dilute shareholders by raising capital to repay them.

Eventually, Wells was once again strong-armed by the government, into raising $12.25 billion to repay its $25 billion worth of TARP funds in December, according to Warren Buffett, whose Berkshire Hathaway(BRK.A) is a major holder of Wells Fargo shares.