Aug. 1 (Bloomberg) -- White House senior adviser Valerie Jarrett said compensation on Wall Street shows a “huge disconnect” from what most Americans are paid and “checks and balances” are needed to prevent another financial crisis.

“There’s a huge disconnect between what the average American worker receives in terms of compensation and some of what we’re hearing about on Wall Street,” she said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “We do believe that when the taxpayer monies are invested that compensation should be fair.”

She said President Barack Obama’s proposals to revamp oversight of the financial-services industry would help ensure “we have the kind of regulations in place and checks and balances so that it doesn’t run amok again.”

Jarrett, 52, said the administration has “a great deal of confidence” that a health-care overhaul, Obama’s top domestic priority, would be approved this year. And she said sinking presidential poll numbers are “absolutely natural” amid continued economic woes and high unemployment.

“The American people are concerned,” Jarrett said. “Everyone recognizes that we’re going through this difficult period.”

A poll conducted July 22-26 by the Pew Research Center found that 43 percent of Americans approve of the way Obama is handling health care, down 17 percentage points since April. The president’s overall approval rating was 54 percent, down from 64 percent in February.

‘Nonsense’

Jarrett dismissed reports of friction between her and White House Chief of Staff Rahm Emanuel. “That’s a lot of nonsense,” Jarrett said. “Ask him.”

A profile of Jarrett published in the New York Times Magazine on July 26 described tension between the two Obama advisers.

Outrage over Wall Street pay was reignited this week after New York Attorney General Andrew Cuomo reported that nine banks getting U.S. aid paid $32.6 billion in bonuses last year. Cuomo’s report showed the nine companies paid 4,793 employees bonuses that exceeded $1 million last year.

In response, the House of Representatives empowered regulators to ban Wall Street incentive pay that encourages risk-taking. The measure, passed 237-185 yesterday, authorizes banking agencies and the Securities and Exchange Commission to prohibit compensation practices that threaten the sustainability of financial companies and “could have serious adverse effects on economic conditions.” The bill must pass the Senate and be signed by Obama to become law.

Aligned Compensation

“Compensation should be aligned with the investors and the shareholders,” Jarrett said.

Jarrett, the former chief executive of a Chicago real- estate company who acts as the president’s liaison to the business and financial community, dismissed reports the administration and Wall Street are at odds.

“We have a Cabinet that is sensitive to the needs of the business community,” she said. Business leaders who have spent time with Obama “understand his philosophy; there’s no disconnect.”

She said criticism of Obama’s Cabinet because it doesn’t include any former top executives was off base.

“We have a very diverse cabinet,” she said. “We’ve recruited broadly in the business community.”

Talk and Listen

She said that part of her White House job “is to go around and talk to the business community and listen to CEOs, and time and time again I’m hearing about companies who are ready to invest in our country.”

She pointed to economic reports showing the worst U.S. economic slump since the Great Depression abated in the year’s second quarter as government spending programs started to kick in.

Gross domestic product shrank at a better-than-forecast 1 percent annual pace after a 6.4 percent drop the prior three months, according to Commerce Department figures released yesterday in Washington. A survey of purchasing managers showed separately that business contracted less than estimated this month.

Still, Jarrett warned of “continued job loss,” even though the “GDP numbers today were stronger than had been anticipated.”

Obama “really was able to rescue the economy, bring it back from the precipice of disaster, and now we’re working on rebuilding it,” she said.

To contact the reporter on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net

Last Updated: August 1, 2009 00:01 EDT