Aug. 12, 2009 -- Perhaps no issue has incited more public outrage than companies paying out big bonuses to top executives after receiving billions in taxpayer bailout money. Now the Obama administration's pay czar is preparing to take action.
In recent weeks, Kenneth Feinberg has been meeting with seven companies receiving what the Obama administration calls "exceptional assistance": AIG, Citigroup, Bank of America, GM, GMAC, Chrysler and Chrysler Financial.
By Thursday, these companies must submit to Feinberg this year's pay plans for their top 25 executives. Feinberg will then have 60 days to assess the plans and work with the companies on their compensation structures.
Pay plans for the other top 75 executives at these companies are due at a later date.
The process is sure to be contentious. Critics abound on both sides of the issue. Some people are outraged about companies collecting taxpayer money only to then dish out big bonuses in the midst of a massive recession. Others are fearful of the government delving too far into the affairs of private businesses.
The conflicts inherent in his job are not lost on Feinberg himself.
"Historically, the American people frown on the notion of government insinuating itself into the private marketplace," he told ABC News on June 11, a day after his appointment. "My answer to those critics is I understand that concern, I share that concern, and the question is how do you strike a balance between that legitimate concern and the populist outrage at prior industry compensation practices?"
Even in its first six months in office, the Obama administration has seen first-hand the type of populist outrage that Feinberg hopes to avoid.
In March, insurance company AIG, the recipient of more than $180 billion in taxpayer bailouts, caused an uproar by paying out $165 million in corporate bonuses.
The ensuing furor -- both inside and outside the Beltway -- was directed not just at the company, but at the government that had bailed it out.
Two Republican lawmakers even called for President Obama's Treasury Secretary Tim Geithner to resign.
But the problems presented by the AIG situation were not unique to the insurance giant. Big bonuses are commonplace on Wall Street, where compensation plans are viewed as a key way to attract and retain top talent.
The original nine banks receiving bail-out money paid out nearly $33 billion in bonuses in 2008, according to a recent report from New York Attorney General Andrew Cuomo. Citigroup, the recipient of $45 billion in bailout funds, is reportedly set to dish out $100 million to Andrew Hall, a top trader.
Enter Feinberg. Hoping to avoid more bonus uproars, he has been tasked with overseeing compensation at these seven firms. Companies will have to convince him that their pay plans reward good performance while discouraging excessive risk-taking.
"We are not going to provide a running commentary on that process, but it's clear that Mr. Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance" is the oft-repeated line from Treasury Department spokesmen.
Treasury officials note that Feinberg cannot force companies to break contractual obligations entered into before Feb. 12 of this year. But that has not stopped critics from crying foul about excessive government meddling in private businesses.
"This is a huge watershed step towards government involvement in the private sector," warned Scott Talbott of the Financial Services Roundtable.
Feinberg is well aware of all the criticism.
"No matter which way I turn, you're facing criticism either from those who are appalled at what these companies did versus those who question the value of the government getting involved," he said in June.
But Feinberg has been in the eye of the storm before: He was chairman of the compensation fund for the families of victims of the 9/11 attacks.
This week, caught between critics coming at him from all angles, his work will begin in earnest.