A Sharper Eye on Pay
Financial initiatives and rumors of initiatives flew thick and fast in Washington this week. On June 9, Treasury gave 10 big banks a green light to pay back $68 billion in federal TARP funds. The move came as a testament to the banks' apparently improving health—and also got them out from under pay rules Congress had imposed. But the next day, Treasury Secretary Timothy Geithner announced the principles underlying the Obama Administration's drive to reform financial-industry pay practices generally. While the plan skipped salary caps at firms receiving bailouts, Geithner called for more transparency and for closer links between pay and long-term performance. He promised to back legislation letting the SEC get tougher with corporate compensation committees and give shareholders more of a say on pay. On another front, Citigroup (C) put the finishing touches on its plan to recapitalize with $58 billion in common stock, diluting current shareholders by 75% and leaving Washington owning about 36% of the company.