The provision, written by Senator Christopher J. Dodd, Democrat of Connecticut, highlighted the growing wrath among lawmakers and voters over the lavish compensation that top Wall Street firms and big banks awarded to senior executives at the same time that many of the companies, teetering on the brink of insolvency, received taxpayer-paid bailouts.
?The decisions of certain Wall Street executives to enrich themselves at the expense of taxpayers have seriously undermined public confidence,? Mr. Dodd said Friday. ?These tough new rules will help ensure that taxpayer dollars no longer effectively subsidize lavish Wall Street bonuses.?
Top economic advisers to President Obama adamantly opposed the pay restrictions, according to Congressional officials, warning lawmakers behind closed doors that they went too far and would cause a brain drain in the financial industry during an acute crisis. Another worry is the tougher restrictions may encourage executives to more quickly pay back the government?s investments since, in a compromise with the financial industry, banks no longer have to replace federal funds with private capital. That could remove an extra capital cushion, further reducing lending.