Having called it "shameful" that some companies who received federal bailout funds continue to shower their executives with expensive bonuses, President Obama will announce a plan today that would limit executive pay in such companies. Under the plan, executive salaries would be capped at $500,000. Any bonuses would have to come in the form of company stock that could not be sold until the bailout money is paid back.
This call for limits on executive pay comes on the heels of some shocking revelations. Wall Street executives received a total of $18 billion in bonuses in 2008. Also, it was discovered that Citigroup, which has accepted $45 billion from the government, was having a new $42 million private jet delivered. Citi scrapped the jet plan after the embarrassment.
One key thing to remember is that these new restrictions on executive pay will only affect companies that receive federal bailout money going forward. There will be no limits on executive salaries for companies who do not receive future bailout funds; however, companies that are already receiving money through the TARP program will be subject to enhanced transparency and oversight rules.
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Comments: 11
Some people will complain about government nationalizing the banks. But these banks have shown no ability to run themselves effectively. And the problem is that when banks fail, innocent people get hurt (lost pensions, lost savings, inability to secure lines of credit). The government has an obligation to make sure these things run.
I'd just like to point out that Congress doesn't really get paid all that much compared to private sector positions. The current salary is $174,000 for rank and file members. Considering that these positions generally require them to maintain two residents (one in their home district and one in Washington) that really isn't a lot compared to what many of them earn in their private sector jobs.
You know, my mail carrier asked for a bailout from me around Christmas time, and she delivered my mail to the wrong place many times this year. Maybe we should put a pay freeze on them as well!
Don't disagree with Obama, just a different side of the coin is all
.peace
How about Wells Fargo? They were FORCED into taking bailout money? Gonna cut their CEO's pay?
So, then, all the exectutive who won't go work for the "bailout banks" go to work for smaller banks, making them successful and big. The "bailout banks" will have a tough time finding good management, and they slowly die a slow death with all out tax dollars down the drain.
Socialism doesn't work. Who next to regulate? Who gets to call the shots?
I suspect if these executives were so successful, their banks wouldn't need bailouts now, would they?
I think the point is nobody care what they spend THEIR money on. The issue is what they spend the TAXPAYERS' money on.