UPDATE 1-W.House warns on Wall Street pay

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WASHINGTON Oct 14 (Reuters) - Wall Street pay must be based on a reasonable assumption of risk and cannot return to the speculative era that existed before last year's financial collapse, White House spokesman Robert Gibbs said on Wednesday.

Asked about reports that some Wall Street bonuses are rising again, Gibbs told reporters, "Pay on Wall Street can't return to the speculative era that we saw last, specifically right before the economic collapse..."

He said "pay has to be based on a reasonable assumption of risk, not speculation."

The U.S. Congress will soon probe executive compensation at companies such as American International Group Inc (AIG.N) and Bank of America (BAC.N) Corp receiving significant taxpayer funds, the chairman of the House Oversight and Government Reform panel said on Wednesday.

Treasury's pay czar, Kenneth Feinberg, will testify in two weeks before the committee, the panel's chairman said. Feinberg is in charge of deciding compensation packages for the highest- paid employees at companies that received government assistance. (Reporting by Steve Holland; Editing by Ross Colvin and Sandra Maler)