Geithner Says No To Capping Pay

Treasury Secretary Geithner says he's opposed to specific pay caps, but leaves open the possibility of tying compensation to bank performance.

Author:: Scott Eden
Publish date:: May 19, 2009 11:41 AM EDT

Treasury Secretary Geithner says he's opposed to specific pay caps, but leaves open the possibility of tying compensation to bank performance.

U.S. Treasury Secretary Timothy Geithner said he was against capping Wall Street executive pay, but left open the possibility of instituting some broad rules that tie compensation to company financial performance.

Geithner made his remarks on Monday, during a lunch at the National Press Club in Washington.

"I don't think our government should set caps on compensation," Geithner said, according to reports. "What I think we need to do is make sure we put in place some broad constraints on the incentives compensation systems create."

Compensation, of course, has been a divisive topic since the financial crisis began last year. The controversy only burned hotter after

AIG's

(AIG) - Get Report

executive bonuses became public a few months ago. In response, the outraged House passed a bill that would tax the bonuses of higher-ups at companies receiving federal bailout money by 90%.

The bill, which has found little support in the Senate, would have hit even the country's better-managed banks, such as

Goldman Sachs

(GS) - Get Report

JPMorgan Chase

(JPM) - Get Report

and

Wells Fargo

(WFC) - Get Report

. This, in turn, has motivated those firms to pay back their TARP money in the wake of the federal stress tests.

Goldman and

Morgan Stanley

(MS) - Get Report

have both asked the

Federal Reserve

to repay the combined $20 billion they've received under TARP. Discussions between the parties are ongoing. According to other reports, JPMorgan has also applied to repay its TARP funds.