The Securities and Exchange Commission (SEC) may be given new powers under President Barack Obama’s wide-ranging regulatory reforms to challenge executive pay at banks

President Obama will reveal next week his plans to streamline America’s financial regulation.

But new proposals on executive compensation could be unveiled as early as tomorrow, including restrictions on pay at companies that received Government bailouts.

Timothy Geithner, the Treasury Secretary, said that the SEC, America’s top securities regulator, and the Federal Reserve, the country’s central bank, would be involved in setting out principles for compensation in the financial sector.

"As you’ll hear from us in the next few days, the SEC has some important responsibilities and obligations in this area and some tools and authorities they may seek in this area," Mr Geithner told a Senate committee. An SEC spokesman declined to comment.

The Treasury has given 10 banks permission to repay $68 billion in borrowings from the Troubled Asset Relief Program (Tarp), the Government’s $700 billion bailout fund. The banks are keen to pay off their taxpayer loans to prevent the Government from having too much influence over executive compensation.

In February President Obama described the $18 billion of bonuses paid by Wall Street last year as "shameful". But Mr Geithner has already ruled out setting explicit pay caps. It is not clear what the SEC’s new powers may entail.

In 2007 the SEC revised its rules on pay to force companies to reveal the pay packages of their five best-paid executives.

Talking more widely about regulation, Mr Geithner repeated previous proposals to create an over-arching systemic risk watchdog.

There has been criticism that America’s patchwork of financial regulators allowed the risky behaviour of the banks and other companies to go unnoticed.

"These changes will help prevent another crisis of the magnitude that we’ve just lived through," Mr Geithner said.

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