With growing public and political dissatisfaction of the bailout spending, Obama announced on Wednesday his plans to impose a $500,000 salary cap for corporate executives benefiting from the bailout.
Though this is a deliberate interference of government policy in corporate America, few doubt the necessity of this intervention. Not only has the irresponsible spending of senior executive lead to their own downfall, they are now asking taxpayers to help them back up. Even the top Republican on the Senate Banking Committee, Sen. Richard Shelby agrees with Obama’s actions stating, “In ordinary situations where the taxpayers’ money is not involved, we shouldn’t set executive pay, but where you’ve got federal money involved, taxpayers’ money involved, TARP money involved, and the way they have spent it, with no accountability, is getting close to being criminal.”
Normally, such measures as government imposed salary caps would seem like an infringement upon capitalism, but when taxpayer’s money is being used for corporate bailouts, special circumstances and rules must be enforced. Obama assures his stance stating “This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success, but what gets people upset and rightfully so, are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”
Unfortunately, the weight of many of the corporate mistakes is falling hardest on middle/lower class America. In a press conference with President Obama, Secretary of Treasury Timothy Geithner empathized, stating “There is a deep sense across the country that those who were not … responsible for this crisis are bearing a greater burden than those who were.”
This government intervention into corporate America marks only the first step in the new regulations. Other proposed rule include…
• Requiring top executives at financial institutions to hold stock for several years before they can cash out.
• Requiring nonbinding “say on pay” resolutions (gives shareholders more say on executive compensation.)
• A Treasury-sponsored conference on a long-term overhaul of executive compensation.