U.S. President Barack Obama is welcoming the Treasury Department's order to slash top executives' pay at seven big companies that have not paid back their government bailouts. The U.S. central bank will also examine the way bankers are paid.
The government is telling the seven companies that have received the most federal aid to drastically cut the pay of their 25 highest-paid executives.
President Obama says the Treasury Department made the right decision.
"This is America," said President Obama. "We do not disparage wealth. We do not begrudge anybody for doing well. We believe in success. But it does offend our values when executives of big financial firms-firms that are struggling-pay themselves huge bonuses, even as they continue to rely on taxpayer assistance to stay afloat."
Kenneth Feinberg, the Treasury official leading the pay review, says the executives' salaries will be cut by as much as 90 percent, and their average total compensation will drop by about half, starting in November.
Mr. Obama says Feinberg's actions are a step toward greater accountability in the financial industry.
"I believe he has taken an important step forward today in curbing the influence of executive compensation on Wall Street, while still allowing these companies to succeed and prosper," said Mr. Obama.
The seven companies affected by the order are Bank of America, American International Group and Citigroup, as well as Chrysler, General Motors and their financing arms.
The president is asking Congress to approve greater regulation on executive pay.
"More work needs to be done, which is why I urge the Senate to pass legislation that will give company shareholders a voice on the pay packages awarded to their executives," he said. "And I urge Congress to continue moving forward on financial reform that will help prevent the crisis we saw last fall from happening again."
At the same time, the U.S. central bank, the Federal Reserve, is considering new rules on bankers' pay.
The proposal would not limit bankers' pay, but would allow the Fed to review, and possibly veto, pay policies that cause too much risk-taking at banks.
Fed Chairman Ben Bernanke says some misaligned pay systems encouraged executives to take excessive risks.