paulson retreats on pay

Paulson is working to salvage a deal in the face of opposition from lawmakers of both parties. House Republicans today warned him that the plan wouldn't pass and asked for time to consider alternatives. Paulson and Federal Reserve Chairman Ben S. Bernanke stressed the importance of easing the credit crunch soon, while acknowledging the need for taxpayer protections.

``The American people are angry about executive compensation and rightfully so,'' Paulson, a former chief executive officer of Goldman Sachs Group Inc., told the House panel today, departing from his prepared remarks. ``We must find a way to address this in the legislation, but without undermining the effectiveness of this program.''

The remarks were a shift from yesterday, when the Treasury chief said introducing limits on pay would impede getting the fund started. Both Democratic and Republican legislators have insisted on some restrictions on compensation for companies that would sell devalued assets to the government.

Talks `Ongoing'

``Nothing is final and discussions are ongoing,'' said Treasury spokeswoman Jennifer Zuccarelli in response to a question about Paulson's position on the equity provision.

Frank is consulting Paulson as he leads negotiations in the House on crafting a joint Senate-House measure that Congress will vote on as early as this week. The legislation doesn't need approval from the Treasury to be considered by Congress.

A joint House-Senate bill may be ready as soon as tomorrow, Frank said.