U.S. Treasury Secretary Timothy Geithner denied on Sunday the Obama administration was crafting bailout initiatives to allow companies to evade limits on executive pay and other restrictions imposed by Congress.
No, that's not true, Geithner said when asked about a report in Saturday's Washington Post that the White House was trying to allow some exceptions.
Now, our obligation is to apply the laws that Congress just passed on executive compensation and we're going to do that, he told the CBS program Face the Nation.
We're also going to make sure that these programs are as effective as possible in making credit more available to businesses and families across the country.
The Post said President Barack Obama's administration believes it can sidestep the rules because it has in many cases decided not to provide federal aid directly to the financial institutions, instead setting up special entities that act as middlemen to channel the funds.
Executive pay restrictions are among efforts by Congress to claw back bonuses and curb pay amid public anger over executive bonuses at insurer American International Group, which has received a bailout worth up to $180 billion.
The Pay for Performance Act of 2009 was passed by the House of Representatives last week and now goes to the Senate.
Geithner also said the U.S. government would not hesitate to oust management of big banks that require exceptional assistance, as it did last week with General Motors.
He noted the government had shaken up management at financial institutions Fannie Mae, Freddie Mac and AIG, and we'll do that in the future if that is necessary.
Some financial firms have said the prospect of compensation limits make them reluctant to join in the Treasury's financial rescue package, which could diminish its power to cleanse toxic assets from banks' books and jump-start lending.
Obama senior adviser David Axelrod told Fox News Sunday the president does not want to discourage companies from participating in the Treasury programs, but has a tough set of standards on executive pay.
On some of these programs, we're asking financial companies to come in and help solve this problem by providing more lending, by buying up toxic assets and so on, he said. We don't want to create disincentives and undermine the program.
So we have to look very closely at this, making sure that we're not rewarding people for irresponsibility, that people -- that firms that get extraordinary help -- aren't getting, aren't giving out huge bonuses.
Geithner said the White House was committed to enforcing the restrictions approved by Congress.
Absolutely, because we want the American taxpayers' assistance going to generate greater lending -- not providing excess compensation, he told CBS.
It is very important to us that every dollar of assistance we provide goes to expand lending.
(Editing by John O'Callaghan)