Stimulus' cap: Christopher Dodd's surprise provision doesn't apply solely to senior executives,

The L.A. Times reports:

Reporting from Washington — An effort to curb executive pay at the nation's most troubled banks, inserted at the last minute into Congress’ mammoth economic stimulus bill, has sparked an outcry from financial services groups and others who warn the caps could harm the government's efforts to revive the economy.

During final negotiations on the $787-billion package last week, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) slipped in a provision to limit bonuses for executives at institutions receiving government bailout funds to a third of their salaries. And the bonuses could be paid only in stock irredeemable until the government was paid back in full.

President Obama is expected to sign the stimulus into law Tuesday in Denver. But the White House and Senate Democrats could clash later over the executive pay caps if the White House seeks a legislative adjustment.

The limits go beyond those advocated by the Treasury Department and came as a surprise to Wall Street. Financial services experts are particularly troubled that the caps apply not just to senior executives but to traders, investment bankers, fund managers and others compensated largely through performance-based commissions.

Dodd's provision also would apply to the more than 350 firms that have received money from the Troubled Asset Relief Program launched by the Bush administration in the fall. It would affect senior executives and as many as 20 of the highest-paid employees of a participating firm.

Great moments in central planning.Good luck to the high end real estate market that depends on high income financial services professionals!