UPDATE 1-Obama unlikely to toughen Wall St pay rules-report

WASHINGTON, Jan 31 (Reuters) - The Obama administration is unlikely to impose tougher restrictions on executive pay on most firms receiving aid under the government's $700 billion financial rescue program, The Washington Post reported on Saturday.

But a Treasury Department source told Reuters later the administration remained intent on addressing executive compensation in changes to rules of the Troubled Asset Relief Program.

President Barack Obama and some members of Congress have strongly criticized recent bonuses given out to executives at financial institutions that received government assistance. Obama on Thursday called such large bonuses "the height of irresponsibility" and "shameful."

At the White House on Friday, Obama's spokesman said the president's upcoming plan for financial stability would address executive compensation and bonuses.

"I think you will see the president and his economic team outline a plan to deal with what he found irresponsible yesterday," Robert Gibbs told reporters. "Stay tuned, because something on that is coming soon." He declined to say more.

Citing a source familiar with the administration's deliberations, the Post said officials were concerned that harsh limits could discourage some firms from asking for aid.

The newspaper said that while some details of the plan needed to be hammered out, the strategy was likely to be laid out publicly in about a week.

While relatively healthy firms are unlikely to face stiff restrictions on executive compensation, companies that need more dramatic government assistance would face more punitive terms under the plan, it said.

Under the original rescue program approved by Congress in October, executives at financial firms faced federal limits on their multimillion-dollar pay packages. Those restrictions are unlikely to significantly reduce executive pay, analysts say.

(Writing by Eric Beech and Jackie Frank; Editing by Peter Cooney) Keywords: FINANCIAL/PAY

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