Amid news that base salaries at Citigroup Inc. (C) could rise, the Obama administration Wednesday reiterated that it has significant power to make sure compensation practices at government-rescued financial companies are reasonable.

Citigroup aims to change its compensation practices to rely less on bonuses, and that means base salaries might rise.

Still, the bank has said that any adjustments won't increase overall compensation of employees affected by the change.

Without particularly naming Citigroup, the administration released a statement to point out that companies such as Citigroup that have received substantial taxpayer dollars will have to persuade the administration that their pay policies strike the right balance.

Specifically, Citigroup and the six other companies receiving exceptional assistance from the government will have to face Kenneth Feinberg, the new pay czar at the Treasury Department.

He "has broad authority to make sure that compensation at those firms strikes an appropriate balance," an administration official said in a statement Wednesday.

Feinberg oversaw the government's efforts to compensate Sept. 11 victims as was recently appointed as a new "special master" at Treasury to review compensation practices at: Citigroup, American International Group Inc. (AIG), Bank of America Corp. (BAC), General Motors Corp. (GMGMQ), GMAC LLC, Chrysler and Chrysler Financial.

The reviews are part of a broader push by the administration to encourage changes in pay practices at companies so that they don't encourage the kind of excessive risk taking that has been blamed for helping to push financial markets into crisis.

The administration official said Feinberg has already started up discussions with the seven companies about their compensation plans.

At the same time, the administration official added that the Treasury has no desire to run the day-to-day operations of private companies, regardless of whether they have received bailout funds.

-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255; maya.jackson-randall@dowjones.com

(Matthias Rieker in New York contributed to this story.)