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Obama puts pay cap on execs who take federal bailout funds

US President Barack Obama yesterday announced US$500,000 pay caps for financial executives whose firms take federal bailout money as he looked to overcome the embarrassing withdrawal of two top nominees for his administration.

Obama was reacting to public anger over reports last week that Wall Street firms shoveled out more than US$18 billion in 2008 year-end bonuses even as the industry took billions in government rescue money to prevent a feared collapse of the nation's financial system.

Obama was taking on the huge salaries and bonuses paid to American financiers a day after his economic message was overshadowed by the surprise announcement that former Senator Tom Daschle was withdrawing his nomination for a key Cabinet post under the cloud of a big tax problem.

He withdrew only hours after Nancy Killefer pulled her candidacy to be the first chief performance officer for the federal government, saying she didn't want her failure to submit payroll taxes for household help to be a distraction for the president.

Obama was forced to spend time in a rare series of back-to-back television interviews with each major US network conceding he had "screwed up" on the Daschle nomination. He had wanted to focus on promoting his economic stimulus plans.

The pay cap would lay the ground for next week's unveiling of a new framework for spending the money that remains in the US$700 billion financial rescue fund, established late last year by the former Bush administration to prevent the collapse of the country's financial underpinnings.

Spending of the first half of the measure has come under heavy criticism for focusing too heavily on bank and financial institution bailouts and too little on helping millions of homeowners facing foreclosure of home mortgages.

The pay cap announcement is just one of the fronts on which Obama is battling against the nation's worst economic crisis since the Great Depression.

The president and his aides continue pushing and prodding a massive economic stimulus bill now wending through the Senate. Its cost climbed above US$900 billion as of Tuesday as senators amended the package.

A companion bill, costing US$819 billion, already passed the House of Representatives. Once senators finish their version of the legislation, the two houses of Congress will come together to reconcile differences in the massive spending and tax-cut legislation.

Obama says he still expects to have that bill to sign into law by mid-month.


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