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Feinberg to tackle excessive risk Feinberg to tackle excessive risk
(30 minutes later)
Kenneth Feinberg has said he plans to address the issue of excessive corporate risk-taking in his role as the new US "pay czar".Kenneth Feinberg has said he plans to address the issue of excessive corporate risk-taking in his role as the new US "pay czar".
Mr Feinberg denied that executive compensation levels had contributed to the current economic crisis.Mr Feinberg denied that executive compensation levels had contributed to the current economic crisis.
He told the BBC that the crisis was fuelled by taking risks which led to excessive levels of compensation.He told the BBC that the crisis was fuelled by taking risks which led to excessive levels of compensation.
Mr Feinberg was appointed on Wednesday to review executive pay at firms that have received government bail-outs.Mr Feinberg was appointed on Wednesday to review executive pay at firms that have received government bail-outs.
He also revealed that he would not "get a penny" for his new role.He also revealed that he would not "get a penny" for his new role.
Mr Feinberg, a Washington lawyer, will set the pay for 175 top executives working for firms which have been rescued by government money.Mr Feinberg, a Washington lawyer, will set the pay for 175 top executives working for firms which have been rescued by government money.
They include the insurer AIG, Citibank, Bank of America, Chrysler and General Motors.They include the insurer AIG, Citibank, Bank of America, Chrysler and General Motors.
He will have the power to reject pay plans he deems excessive.He will have the power to reject pay plans he deems excessive.
However, he said he did not know whether he was going to have to force executives to cut their pay.However, he said he did not know whether he was going to have to force executives to cut their pay.
'Terms and conditions' Terms and conditions
Mr Feinberg is used to delicate situations. He had to decide how much families of the 9/11 attacks would receive in compensation.Mr Feinberg is used to delicate situations. He had to decide how much families of the 9/11 attacks would receive in compensation.
He told the BBC he would consider a number of factors when deciding the level of executive pay at those companies which have taken government aid money.He told the BBC he would consider a number of factors when deciding the level of executive pay at those companies which have taken government aid money.
"The real issue in these cases is not as much the level of compensation as what the terms and conditions are that are tied to that compensation," he said"The real issue in these cases is not as much the level of compensation as what the terms and conditions are that are tied to that compensation," he said
"One problem, in the past few years is that compensation was tied to excessive risk-taking that ultimately brought down these institutions.""One problem, in the past few years is that compensation was tied to excessive risk-taking that ultimately brought down these institutions."
US regulators walk a fine line between attracting the best executives to the enterprises in which it holds a controlling interest, while ensuring that compensation packages do not encourage the kind of risk-taking that some argue led to the financial crisis in the first place.US regulators walk a fine line between attracting the best executives to the enterprises in which it holds a controlling interest, while ensuring that compensation packages do not encourage the kind of risk-taking that some argue led to the financial crisis in the first place.
Mixed reactionMixed reaction
Some analysts believe Mr Feingold's position will be seen in a positive light from the perspective of the American main street.Some analysts believe Mr Feingold's position will be seen in a positive light from the perspective of the American main street.
"I think it will give Americans a sense of fairness that people who are receiving government money will have some constraints on their compensation, " said Cary Leahy from Decision Economics."I think it will give Americans a sense of fairness that people who are receiving government money will have some constraints on their compensation, " said Cary Leahy from Decision Economics.
But critics have argued that the creation of this role has more to do with good politics than corporate oversight.But critics have argued that the creation of this role has more to do with good politics than corporate oversight.
"I think that this is a passing fashion in American capitalism, said Peter Morici, professor of International Business at the University of Maryland."I think that this is a passing fashion in American capitalism, said Peter Morici, professor of International Business at the University of Maryland.
"The only way you're going to get pay regulation on Wall Street and safety on Wall Street is to have all of the banks working by the same rules."The only way you're going to get pay regulation on Wall Street and safety on Wall Street is to have all of the banks working by the same rules.
"Just regulating Bank of America and Citigroup is not going to get you there.""Just regulating Bank of America and Citigroup is not going to get you there."
However, Mr Feinberg denies the accusation that he is interfering in the free market.However, Mr Feinberg denies the accusation that he is interfering in the free market.
"I am not imposing any restrictions on private capitalism in the private marketplace, but rather am working with these companies to try and develop a consensus package of reforms that can be embraced by everybody," he said."I am not imposing any restrictions on private capitalism in the private marketplace, but rather am working with these companies to try and develop a consensus package of reforms that can be embraced by everybody," he said.