Kenneth FeinbergPay czar Kenneth Feinberg must feel something like a biblical prophet, except that his job in the Obama administration is more difficult. Ancient sages warned people to do the right thing or face the wrath of the Lord. Feinberg, however, has to bring shame to Wall Street, which is home to many people who don't seem to know what shame is.

Feinberg released a report on Friday that looks at the "ill-advised" pay at 17 banks. The banks in question doled out the money soon after they received federal bailout money at the height of the financial crisis in 2008. Eleven of the firms have subsequently paid the government back, at a tidy profit to Uncle Sam.

Feinberg's report is yet another condemnation of Wall Street's greed. As The New York Times notes, "Mr. Feinberg's report points to companies that he says paid eye-popping amounts or used haphazard criteria for awarding bonuses." Of course, it was questionable for Wall Street bankers to benefit financially from the mess they helped create. From a shareholder's perspective, these payouts underscore the dreadful corporate governance at many of these companies. The trouble is, there is not a single thing Feinberg can do about it.

"Although the Recovery Act and Treasury rules later imposed much stricter limits on pay at TARP recipients, at the time the reviewed payments were made, compensation such as cash bonuses and retention awards were permitted by the rules in place at the time," according to a Treasury Department press release.

Shame Is the Only Weapon

Although Feinberg's report will raise some eyebrows, Wall Street doesn't seem to be threatened. A recent survey by the careers website eFinancialCareers.com underscores how well bankers are adapting to the new environment. "Nearly half of Wall Street professionals (46%) tell us their pay structure has changed since the crisis, particularly those who work at large firms. To date, the most frequent change has been base salary increases to address smaller performance-based compensation," the site (where I used to be a freelance contributor) says. "With the Federal Reserve issuing their final guidance on incentive compensation, we can surely expect to see more adjustments to pay structures over the next few months."

But despite the pressure form Washington and public opinion, Wall Street bonuses will be paid out at about the same level this year as last year and similar to 2007 levels, if 2010 results come in as expected, according to the Times.

Feinberg, whose review looked at payments that taxpayer-assisted firms made to the top 25 executives prior to February 17, 2009, is a persuasive guy. He is trying to cajole Wall Street to "do the right thing." The banks will resist his efforts because the pay czar lacks the ability to turn anyone into a pillar of salt.

Nonetheless, Feinberg is prepared to fight the good fight. Feinberg called for compensation committees of the affected companies to voluntarily adopt measures to stop such practices in future. Among the ideas he proposes is giving firms the authority to "restructure, reduce or cancel payments to executives" in the event of a crisis and not to be bound by guarantees. These are worthy ideas which will probably fall on deaf ears.

Maybe Feinberg will have better luck with his next biblical challenge: overseeing the compensation of victims of the BP (BP) oil spill.

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