Only $500,000 OBAMA Says!

(Wednesday Feb 4th, 2009) President Barack Obama set to clamp a half million dollar ceiling on pay for executives of stricken finance firms which take taxpayer bailouts, in a new bid to tame Wall Street excess.

These proposals are said to include the following provisions:

• A $500,000 cash cap on annual compensation for senior executives
• Requiring top executives at financial institutions to hold stock for several years before they cash out
• Requiring nonbinding "say on pay" resolutions giving shareholders more say on compensation

With Secretary of Treasury Timothy F. Geithner, Obama had this to say... " The economic crisis we face is unlike any we've seen in our lifetime. It's a crisis of falling confidence and rising debt. Of widely distributed risk and narrowly concentrated reward. A crisis written in the fine print of sub-prime mortgages, on the ledger lines of once-mighty financial institutions, and on the pink slips that have upended lives and cost the economy 2.6 million jobs last year alone"

"We know that even if we do everything we should, this crisis was years in the making, and it will take more than weeks or months to turn things around." (see full statement)

I'm not convinced that a pay cap is really that big a deal- just a political move to "quiet the peanut gallery". (source) - talk about disincentive for executives (remember this only applies to banks receiving aid;

"Money is what motivates people to come to Wall Street. It's not a public service job, nor should it pay like one." Oppenheimer's Meredith Whitney.

It's like the outrage over the auto executives taking private jets to their congressional hearings in Washington late last year. The cost of the ride was less than what the companies lose in just one minute of one day, as former White House economic adviser Lawrence Lindsey pointed out to Jon Stewart earlier this week on the Daily Show. And yet it seemed to be all any of the legislators could think about. (source)

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