By Julianna Goldman
Jan. 31 (Bloomberg) -- President Barack Obama’s senior adviser, when asked whether the new administration will ban Wall Street bonuses, said “limiting some of this executive compensation” is necessary to rally public support for a financial-rescue plan.
David Axelrod, who was Obama’s chief strategist during the campaign, stopped short of embracing a ban on bonuses for companies receiving bailout funds. He left no doubt, however, that the administration will take tough steps to address the issue.
“It’s very hard for the American people to understand how a bank executive should get a multimillion dollar bonus at a time when he’s asking the government to essentially bail out his institution,” Axelrod said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” scheduled to air this weekend.
Obama, 47, expressed outrage this week after the New York state comptroller reported that Wall Street firms disbursed $18.4 billion in bonuses last year as the U.S. sank into a recession. While the figure represents a decline of 44 percent from the previous year amid record losses in the securities industry, the bonus pool was the sixth-largest ever, the comptroller said in a yearly report.
Geithner Plan
Axelrod said Treasury Secretary Timothy Geithner will “have something to say about” bonuses as early as next week when he releases guidelines for banks receiving funds from the second half of the $700 billion financial rescue package.
The administration is committed to “a strong, private financial sector” in the bank bailout, Axelrod said when asked whether there are discussions to partially nationalize U.S. banks.
“Obviously, we’re trying to help these institutions on a temporary basis, but that’s our goal,” Axelrod said. “We’re going to provide assistance to these institutions and hope that they -- hope and expect that they’ll -- get back on their feet and that credit will flow.”
Financial experts and lawmakers including Democratic Senator Chuck Schumer of New York have said the government may need to spend more than $1 trillion to help the financial markets. Axelrod declined to discuss specific numbers, though he said the administration is crafting a plan that will “set up new rules of the road” for spending the remaining $350 billion of the rescue package approved under the Bush administration.
‘Trust’
“There are a variety of things that we need to do in order to win the trust and confidence of the American people,” Axelrod said. “And we’ll address these other issues down the road, but right now, we’ve got to work with what we’ve got.”
Axelrod defended Geithner, who sparked controversy during his confirmation hearings last week by saying Obama believes China is “manipulating its currency.”
“What Tim said was akin to what the president said during the campaign, these are issues that we have to work through,” Axelrod said. “We weren’t blazing new ground there.”
Obama spoke with President Hu Jintao of China this week following Geithner’s testimony. Axelrod wouldn’t say whether Obama reassured the Chinese leader on this issue.
Separately, Axelrod said the president will “make an announcement shortly” on his choice to lead the Commerce Department, the only Cabinet post left unfilled.
Judd Gregg
Speaking of Republican Senator Judd Gregg, a leading candidate for the position, Axelrod said the lawmaker and Obama “haven’t agreed on all issues,” though the president has “a great respect for his ability and for his seriousness about public service.”
Axelrod also expressed confidence the Senate would confirm former South Dakota Senator Tom Daschle, Obama’s choice as Health and Human Services secretary, whose tax records have come under scrutiny by Republicans on the Finance Committee.
“I think that he’s going to be confirmed,” Axelrod said.
Obama’s economic recovery plan cleared a hurdle this week with House passage of an $819 billion stimulus measure, which now goes to the Senate for approval.
Even though Obama took the unusual step of traveling to Capitol Hill to ask for support from Republican lawmakers, not a single House Republican voted for the bill.
Senate Republicans
Axelrod said he couldn’t predict whether any Republicans would support the package in the Senate, where the bill has grown to almost $900 billion.
“We’ll see,” Axelrod said. “You know, we’re hopeful. But the important thing is that a dialogue was opened. There were good discussions back and forth.”
He also said Obama would continue to try to set the tone of bipartisanship he pledged to bring to Washington during the campaign.
“Old habits die hard in this town,” Axelrod said. “There will be many instances in which there’ll be cooperation -- maybe not with every Republican, and maybe not with every Democrat -- but we’re going to forge coalitions behind all of our initiatives.”
Karl Rove, President George W. Bush’s former adviser, wrote this week that the Obama administration is trying to consolidate more power in the White House at the expense of the Cabinet by doubling the staff.
Axelrod said the larger staff reflects a “multidisciplinary kind of approach” to coordinate issues such as health care and global warming with their related Cabinet departments.
“I appreciate any advice that Karl Rove has,” he said. “But you know, they had their eight years and now we have our chance.”
To contact the reporter on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net.
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