Chicago eyes cap on banker pay to do city business
CHICAGO, Oct 8 (Reuters) - Bankers wanting to do business with the city of Chicago would have to severely limit pay packages for top executives whose companies are participating in a federal bailout, under a proposed ordinance introduced in the City Council on Wednesday.
Under the proposal, annual executive compensation, including bonuses, would have to be capped at $400,000 in order for Chicago to tap a financial institution to serve as a bond underwriter or municipal depository.
"In short, the city of Chicago is not going to roll out the welcome mat for any financial institution that accepts money from this unprecedented federal bailout, yet turns around and hands out huge amounts of money to its executives," Alderman Edward Burke, one of the ordinance's sponsors, said in a statement.
The proposal would cover any financial institution and its affiliates whose troubled assets are purchased by the U.S. government as part of the recently passed $700 billion financial bailout plan.
The measure would also prohibit the city treasurer from purchasing securities issued by institutions that do not adhere to the cap.
Lofty salaries for top bank executives have become a sharp point of contention amid the U.S. government's financial bailout. News that the chief executive of failed savings and loan Washington Mutual Inc. (WM.N) could get $13.65 million for the 18 days he was on the job set off a firestorm of controversy after federal regulators closed the bank and brokered a sale.
Senior underwriters of Chicago bond issues this year included DEPFA First Albany and Citigroup (C.N). UBS Securities (UBSN.VX), which has exited the municipal bond business, and Lehman Brothers, which has been absorbed by Barclays PLc (BARC.L), also headed city bond deals.
The cap would be a big step downwards for big bank bosses like Citigroup's chief executive, Vikram Pandit, who earned $3.2 million last year, according to a March filing. Pandit became CEO of Citigroup last December. (Reporting by Karen Pierog; Editing by Leslie Adler)
