Obama puts salary cap on bailout execs
TEXT OF STORY
KAI RYSSDAL: In a way, the president did the easiest thing first. He went after the guys at the top — bankers who make all the money, who are going to make less of it now. But our Washington Bureau Chief John Dimsdale reports there is less to the president’s new rules than you might imagine.
JOHN DIMSDALE: President Obama says public outrage over bonuses for bankers that get bailouts is undermining the trust needed to resuscitate the economy.
PRESIDENT OBAMA: This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success. And we certainly believe that success should be rewarded. But what gets people upset — and rightfully so — are execs being rewarded for failure.
But the new pay caps are limited to companies that take exceptional amounts of bailout money. Companies like Citigroup or Bank of America that were on the verge of collapse.
Only the top five executives are covered. And they can still earn unlimited amounts of stock, as long as they don’t cash it in until the bailout money is paid back. For some, the president’s crackdown is more style than substance.
Still, Marilyn Cohen at Envision Capital Management says the president got Wall Street’s attention.
MARILYN COHEN: Within just a few minutes of the president’s announcement, there was news that Goldman Sachs would like to pay back its TARP money. Well, guess why? They want to continue to grease their palms just like the old days, and the message is loud and clear, the old days are over.
Executive-pay consultant James Reda says the limits will make banks reconsider taking federal money.
JAMES REDA: In the future, if someone is faced with the idea of falling under the exceptional assistance or going bankrupt, they might consider going bankrupt because they would be treated more fairly. I mean, in bankrupt companies CEOs make more than $500,000 a year, I can tell you that.
Next week the president announces proposals for longer-term limits on corporate salaries, including giving shareholders a nonbinding vote on executive pay.
In Washington, I’m John Dimsdale for Marketplace.
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