Executive Pay Caps Well Received, Even If They Won’t Work

By
So sayeth Ginnifer.
So sayeth Ginnifer. Photo: Getty Images

President Obama's directive to cap the pay for executives of companies that receive federal bailout money is sure to be wildly popular with any American who isn't one of those executives, which is the vast majority of people. Of course, as yesterday wore on, it became less clear whether the pay-cut scheme would be effective, or even helpful: It would only apply to a handful of companies (and none that have already received money), banks are certain to find loopholes, and it may drive so-called "talented" executives away from companies that need them the most. Still, there's a palpable desire to chasten the Wall Street fat cats who ruined the economy, then took our tax dollars, and then spent it on planes and parties and bonuses. And for some people, the fact that the plan may amount to little more than populist theatrics is just fine.

• Felix Salmon thinks Obama "is sending an important message to bank CEOs about the new world which they're living in. And he is protecting taxpayer dollars from being spent on multi-million-dollar executive compensation packages, which is just about the worst form of fiscal spending imaginable." [Market Movers/Portfolio]

• The New York Times editorial board doesn't feel sorry for the bankers. "The banks can pay more than the figure Mr. Obama chose — $500,000 a year — but only in restricted stock that cannot be cashed in until the government has been repaid. That sounds more than fair to us." [NYT]

• Donald Trump says Obama is "absolutely right." [CNN]

• David Callaway believes it's "more a threat than a promise," but he did manage to "get Wall Street's attention." And while the "potential for the best and the brightest to abandon the banks or other restricted places does grow now," there are plenty of smart people "just looking for a chance to move up, to be recognized, to get a shot at $500,000 a year." [MarketWatch]

• Dan Mitchell has "mixed feelings about President Obama’s proposal." Government pay caps are usually a bad idea, but for "executives who came begging to the feds after mismanaging their companies: Sorry, guys, you asked for it." [Corner/National Review]

• Bruce Bartlett fears "that executives running financial institutions will refuse to participate in the government program, even though it makes sense for their companies, because they don’t wish to take a pay cut." [Corner/National Review]

• Megan McArdle mocks those who worry $500,000 isn't enough money to live on. [Brave New Deal/Atlantic]

• Michelle Malkin has "no problem with limiting the executive pay and bonuses of corporations that take billions in taxpayer-funded bailout money," but wonders where it will stop. [Michelle Malkin]

• Joe Weisenthal calls the rules "a joke, but ultimately we're happy about that, since executive pay debates are all about perception, not about economics." Obama "makes a populist statement to make people happy, but in reality doesn't do anything to screw up the banking system worse." [Clusterstock]

• Mike Madden notes that "there is one easy way to keep rolling in the dough: Don't run your company into the ground so quickly that the only way to survive is to get on the dole." [Salon]

• Chuck Todd and friends say that despite reports that Obama's plan "lacks some teeth and has its share of loopholes, the reaction from Wall Street firms seems to suggest that the plan might have its intended impact." [First Read/MSNBC]

• Dan Gerstein thinks "it's a terrible idea in concept, as a matter of economics. Capping executive pay at some arbitrary number does set a troubling precedent, as many critics have argued, and creates a slippery slope. But in practice, as a matter of politics, the abdication of responsibility by the big banks left Obama with no strategic choice but to fill this vacuum." [Forbes]

• The Los Angeles Times editorial board claims pay caps "could make it harder for banks to dig themselves out of their current holes by driving away talented leaders. And yet it may be an indispensable part of the solution" because "Obama has to rescue the TARP's reputation before he can do the same for any more banks." [LAT]