Paulson Bends on Executive Comp

The Bush administration is willing to accept some limits on executive compensation paid by firms that sell troubled mortgage assets to the government, according to Treasury Secretary Henry Paulson. In trying to sell his $700 billion troubled-asset purchase program, the Treasury secretary has run into criticism from Democratic and Republican lawmakers about bailing out firms that have rewarded their executives for taking excessive risks with bonuses and severance packages. The secretary told the House Financial Services Committee that he is willing to consider compensation limits if they are fashioned in a way that does not discourage participation in the program. He noted that community banks and credit unions, not just Wall Street firms, will be encouraged to participate. The latest House Democratic legislative draft calls for a prohibition on "golden parachutes" for two years. The Democratic draft also allows distressed homebuyers to seek relief in the bankruptcy courts -- despite strong opposition from the financial services industry.