By Eric Dash
Everyone in Washington is taking a swing at Wall Street pay.
The Obama administration wants to tax it. The Federal Reserve wants to tweak it. And the Federal Deposit Insurance Corporation wants to shape it.
Even the compensation adviser to the Obama administration, who is nearly powerless now that big banks have returned their bailout funds, is getting a say on pay packages.
Across the capital, federal officials are waging pointed, if calculated, assaults on the billions of dollars in bonuses that banks are preparing to mete out — and, in many cases, hoping to turn the politics of pay to their advantage.
The volley of proposals, particularly word this week that President Obama is considering a tax on big banks to recoup billions of dollars in federal aid, has blindsided many banks. Industry experts, and even some government officials, say some of the plans being floated are at odds with one another or with policy goals like encouraging banks to make more loans.
But tilting at Wall Street is a big game in Washington, one that will grow bigger as federal hearings into the causes of the financial crisis begin on Wednesday. Whether all the hullabaloo will change much on Wall Street is uncertain.
The latest salvo came from Sheila C. Bair, the head of the F.D.I.C., which is moving to impose increased fees on banks with pay practices that the agency considers risky. The F.D.I.C., which safeguards bank deposits, is not seeking to cap pay.
“We’re not talking about levels, notwithstanding my dismay,” Ms. Bair said at a news conference. “This is about structures.”
The F.D.I.C. board, in a 3-2 vote, approved a preliminary plan to tie the fees that the F.D.I.C. charges banks to fill its insurance fund to the banks’ compensation practices. Under the plan, banks that use long-term stock to reward employees and adopt provisions to claw back compensation would pay lower fees. Many of the details are still being worked out, including what constitutes risky compensation.
Some regulators suggested that Ms. Bair, in her haste to put pay on the F.D.I.C. agenda, is raising potential conflicts with the Federal Reserve Board and others moving to scrutinize pay. F.D.I.C. officials said their proposal complemented other government initiatives.
“I think we should wait until we have the results of the board’s efforts before heading down a path that could be both unnecessary and inconsistent,” said John C. Dugan, the comptroller of the currency and one of the two banking regulators on the F.D.I.C.’s five-member board who voted against Ms. Bair’s proposal.
Federal regulators have been trying to sort out the various pay proposals in recent meetings. Administration officials said the F.D.I.C. plan squared with other pay initiatives, although regulators might still need to iron out some inconsistencies.
“Proposals linking comp design to risk should be mutually reinforcing, and we’re pleased that regulators are racing each other to the top by holding banks to tougher standards,” said Neal S. Wolin, the deputy Treasury secretary.
Public anger is growing again over the coming round of Wall Street bonuses. Few government officials want to cede ground now, especially as the running debate over financial reform redraws traditional battle lines.
“It’s a political circus,” said Bert Ely, a banking consultant and longtime Washington hand.
Several banks, among them Goldman Sachs and Morgan Stanley, have even sought advice from Kenneth R. Feinberg, the special master for compensation, said people briefed on the discussions, even though the banks no longer fall under his purview.
“The real driver is that the public thinks the banks blew up the world; they don’t understand why bankers would be paid any bonus — and they don’t understand why they were so overpaid in the first place,” said Douglas Elliott, a fellow at the Brookings Institution and a former investment banker. The Fed, meanwhile, plans to formally approve a final set of best practices for bank compensation within the next few months. It is also charging ahead with a comprehensive review of Wall Street pay, with the goal of blessing compensation policies for about two dozen of the largest banks by the middle of the year.
Separately, Congress is zeroing in on a bonus tax similar to one recently imposed on bankers in Britain, although an effort last year to tax bonuses at 90 percent was quickly killed.
On Tuesday, Representative Peter Welch, Democrat of Vermont, proposed a 50 percent bonus tax at firms that received more than $50,000 of bailout aid. The proceeds would finance small-business lending programs.
Representative Dennis Kucinich, Democrat of Ohio, proposed a 75 percent bonus tax to curb what he saw as windfall profits.
“The atmosphere has become very chaotic,” said Edward L. Yingling, the president of the American Bankers Association. “The industry does not know what is going to come next — or from where.”