Bailed-out US firms to be ordered to slash bonuses

Firms in the US that benefited from billions of dollars of government bailout cash will be ordered to slash bonuses for their highest paid executives, it was reported today.

Sources told the Associated Press that the seven companies that received the most help through the financial crisis will be forced to cut compensation to their 25 best-paid employees by an average of 90%.

It is believed that the Treasury Department will formally make an announcement outlining the plans over the next few weeks. The expected move follows widespread outrage in the US over the high level of bonus packages received at companies that went cap in hand to the government as the economy faltered.

The seven companies identified are Bank of America, AIG, Citigroup, General Motors, GMAC, Chrysler and Chrysler Financial.

According to the Associated Press' source, total remuneration for top executives at the firms will drop by about 50%.

The White House is known to have become increasingly irritated with Wall Street paying huge bonuses at a time when the rest of the country is still suffering from the fall out of the financial crisis.

On Sunday, President Barack Obama's senior aide David Axlerod called the payouts "offensive".

He told ABC's This Week programme: "They ought to think through what they are doing and they ought to understand that a year ago lot of these institutions were teetering on the brink and the United States government and taxpayers came to their defence."