Andrew Torgan
CNN Financial News Producer

Officials in Washington today launched their biggest offensive yet in the war on runaway pay practices in the financial industry, targeting everyone from corporate executives to high-flying traders of complex securities.

The Federal Reserve proposed a sweeping review of pay policies at 28 of the nation's largest banks as part of an effort to make sure employees are not tempted to make the kinds of bets that could put their company at risk of going under.

The central bank said it also planned to review compensation practices at the thousands of regional lenders that make up the bulk of the nation’s banking industry as part of its standard review process.

Separately, the Obama Administration's so-called “pay czar,” Kenneth Feinberg, unveiled sweeping pay cuts for 136 top executives at the seven biggest companies that received a bailout.

Feinberg is demanding that AIG, Bank of America, Citigroup, Chrysler, General Motors, GMAC and Chrysler Financial slash compensation packages for their top 25 most highly-compensated employees by about 50%.

The bulk of those cuts will come from annual salaries, which are expected to fall 90% on average.

Today’s developments represent what is perhaps the most sweeping push yet by Washington to rein in Wall Street’s pay practices. But some compensation experts warn that the actions could have a disastrous series of unintended consequences, including the loss of top employees to companies that are not subject to government restrictions.

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Ali Velshi
CNN Chief Business Correspondent

The free-marketers are all over the government's "power grab" to more closely regulate large non-bank financial companies.

We've heard everything from it's "unconstitutional" because it violates unlawful search and seizure laws.

Others say the idea that there is a regulator encourages failure because someone will bail you out.

These arguments hold little water.

The FDIC is universally seen as the most effective and most successful regulator through this entire recession.

Geithner today is using the argument that that is the model he suggests using.

He's right on this one.

Talking Points Memo
Josh Marshall

According to the Post's A1 story tomorrow, the administration is 'considering asking Congress' (i.e., this is a trial balloon) to give the Treasury Secretary powers to seize non-bank financial institutions: in other words, the Lehman Brotherses and AIGs of the financial world.

Also in the background is the emerging debate about what government agency is going to take on the new role as 'systemic risk regulator' - the Fed? or some new agency yet to be created. This is an issue that Elana Schor has been writing about at TPMDC. And it seems to be swirling in the background in the spat between the White House and Sen. Dodd.

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Jack Gray
AC360° Producer/Writer

I’m excited to hear the government is buying up the country’s toxic assets.  Don’t mind me as I jump to the head of the line.  I mean, I think we can all agree I never should have given financial backing to that Jimmy Carter impersonator.  She was just awful.

And that Robert Frost video game seemed like a good investment at the time, but, in retrospect, it probably was rather tacky to have a digitized version of the poet say “I have miles to go before I sleep” right before he shot a carjacker.

I could accept responsibility for my own financial mistakes, but – as is the American way – I prefer to blame others.  In no particular order:  Betty White, Prince Charles, anyone who works at CNBC and, of course, John Stamos.

I also blame my dog, Sammy, whose voracious appetite for check fraud and Ecstasy forced me to pawn the Oscar I stole from Meryl Streep.

My financial stress is further exacerbated by the fact that I still haven’t won the Powerball jackpot.  Don’t feel bad for me, though.  Feel bad for the people at the lottery commission.  They’re the ones who obviously hate America.

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Jessica Yellin
CNN National Political Correspondent

Slouching alone at the head table before a room of business reporters today, Treasury Secretary Tim Geithner looked like an overgrown prep school student facing the expulsion board. It wasn't what he said, but his demeanor as he said it. Cautious, gazing out from deep-set eyes - he seemed to shrink from the room. And the room was skeptical.

Geither unveiled the new "Public-Private Investment Program," in which taxpayer funds will be used to seed partnerships with private investors that will buy up toxic assets backed by mortgages and other loans.

When the secretary calmly said that taxpayers would get a fair shake in the deal because the funds in question "are managed by professionals who know how to do this for a living," one reporter could be heard sighing, "oh, great."

The wariness was mutual. Asked whether he thought this economic plan would play well outside Washington, Geithner offered a wry smile. "I'm confident that you and your colleagues will do a good job of getting the word out," he replied.

Geithner's presentation lasted just over 35 minutes, the bulk of that time answering reporters' questions - though no cameras or microphones were allowed. Most questions were along the lines of, "why do you think this will work?"

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Andrew Torgan
CNN Financial News Producer

Stocks soared Monday as investors hailed the Treasury Dept.'s plan to buy up billions of dollars worth of so-called “toxic” bank assets, seeing it as a critical move in stabilizing the financial system.

At noon, the Dow was up more than 300 points, and the Nasdaq and the S&P 500 were each up more than 4%. Wall Street is coming off its first weekly back-to-back winning streak in nearly a year.

Sales of previously-owned homes unexpectedly rose in February, recovering from a sharp drop in the previous month.

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Program Note: For more from Ali Velshi on Geithner's plan, tune in tonight for AC360° at 10 p.m. ET.

Ali Velshi
CNN Chief Business Correspondent

...Timothy Geithner shows his hand. Coming out with MOST of the rest of the banking plan (final details will come at the end of April, when the results of the "stress tests" on the bank come in).

So far Wall St. likes the deal, putting the Dow above 7,500 before noon. The plan basically allows private companies to partner with the government to buy some of these so-called "toxic assets" at a good price, with government backing.

It's sort of like the government telling you it'll set aside the best, undiscovered antiques at every garage sale – the stuff that's taking up space for homeowners but the experts know are hidden gems, once they get cleaned-up and displayed properly. Not only that, but the government will come up with half the money if you want it (although when you polish-up and sell the antique, you split the winnings with the government). And if you don't have enough money to take part in this plan, the government will lend it to you.

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David Gergen | Bio
AC360° Contributor
CNN Senior Political Analyst

In a famous exchange in Shakespeare’s play, Henry IV, Part 1, two characters by the name of Glendower and Hotspur are jesting over how to persuade others to follow them. Glendower says, “I can call spirits from the vasty deep,” to which Hotspur responds, “why yes, so can I and so can any man, but when you call them, will they come?”

Treasury Secretary Tim Geithner today summoned spirits from the vasty deep with his ambitious plan to persuade private investors to buy up the toxic assets of troubled banks. All of us have an interest in the plan succeeding – we need our banks to be healthy and able to lend again to consumers and small businesses; the stock market rallied sharply in the opening hours. But the real test will come over time: will the private investors actually come up and buy enough of the toxic assets? We may have to wait a number of weeks to know for sure.

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Gloria Borger
CNN Senior Political Analyst

Tim Geithner may be the latest political piñata in Washington these days, but - policy aside - there may be another reason he is the one fellow everyone is picking on at Treasury: He's there alone.

Believe it or not, Geithner is the only confirmed official at his department. Some top nominees, even those who have served in government before, have decided to withdraw. Others are still pending as they go through arduous background checks that one pro-Obama Democrat calls "maddening vetting hell."

Sure, this is about extensive scrutiny to make sure no one has a tax problem after Geithner's own embarrassing unpaid tax bill. But the staffing problem is not just at Treasury, and it goes way beyond the time-consuming nature of extensive background checks.

It's also about overreaching anti-lobbyist rules.

Consider Tom Malinowski. He's the advocacy director for Human Rights Watch, an expert on genocide and torture. But when it came time for a top human rights job at the State Department, he was turned away.

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Timothy Geithner
For the Wall Street Journal

The American economy and much of the world now face extraordinary challenges, and confronting these challenges will continue to require extraordinary actions.

No crisis like this has a simple or single cause, but as a nation we borrowed too much and let our financial system take on irresponsible levels of risk. Those decisions have caused enormous suffering, and much of the damage has fallen on ordinary Americans and small-business owners who were careful and responsible. This is fundamentally unfair, and Americans are justifiably angry and frustrated.

The depth of public anger and the gravity of this crisis require that every policy we take be held to the most serious test: whether it gets our financial system back to the business of providing credit to working families and viable businesses, and helps prevent future crises.

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