NEW YORK, Feb. 6 (Xinhua) -- Wall Street bigwigs
appalled at it, struggling American taxpayers applauding it, columnists and
blogs making a fuss of it -- U.S. President Barack Obama's executive pay cap has
created a heat wave of all mixed responses. But that just might be about as much
as he can get out it.
Well, the idea of setting a half-million-U.S. dollar
compensation limit on Wall Street top executives whose companies receive
government rescue money is nice, or as the Financial Service Roundtable put, "a
measured response," given the economic difficulties "we are in." The government
intervention can be well justified as in many cases government itself is
factually the biggest stakeholder.
Banks are now motivated to pay back the government
money as soon as possible. JPMorgan and Goldman Sachs have already expressed the
intent. Even Kenneth Lewis, CEO of the deeply troubled Bank of America, said
Friday that he aims at repaying the fund within three years.
And no need to fear the possible brain drain on the street either -- why do we fear to lose the "top notch geniuses?" Aren't they the ones who brought down the Wall Street? With U.S. jobless rate hitting a record 7.6 percent in January, there are bunches of financiers seeking jobs out there. The end of the
day, half a million is not bad at all -- even Obama himself earns 20 percent
less than that. And there is still choice of company stocks which will surely
surge if the institution can repay taxpayers' money.
But despite being a step in the right direction, the
new executive pay rules will not work the magic as many loopholes would limit
the effects.
First of all, who will be affected? The U.S.
Treasury's statement said banks needing fresh "exceptional assistance" would
fall into the category, and the guidelines are not retroactive. That means banks
and institutions which have got money from the first half of TARP fund are
theoretically not affected at all if they don't come back for more. So,
ironically, those Wall Street top executives, whose 18.4-billion bonuses have
fueled the call for a pay cap in the first place, can continue to pocket the
money as they like.
Besides, the guidelines did not give clear definition
of "exceptional assistance," only citing Citigroup, AIG and Bank of America as
examples, all three of which had asked for additional bailout money and a
government guarantee of their assets. But Citigroup believes it's exempt from
this new executive-pay restriction as similar conditions have already been
included in the November deal it signed with the Treasury for more aid. And that
brings another problem -- those who got into bigger trouble and applied for this
special assistance earlier can actually get better off. You would not call this
fair, would you?
Fundamentally, what is capping this pay cap is that
the Obama administration simply set an amount for certain people without
touching the entire payment structure. It is the long-existed Wall Street genre,
a short-sighted craving for quick profit which encourages people to take extra
risk so as to get extra pay and spend at free will, that has led to the
financial crisis. It takes more than a symbolic pay cap to clear the root. To
name a few, a tax policy that assures redistribution of wealth, a sound
regulation system that makes sure no one gets round, and a bunch of smart minds
who actually understand the business.
So right now, the executive payment restrictions
would more serve as comfort pills to angry public. It is rather more political
-- as the vast spending proposed by Obama stimulus plan drew growing controversy
and the bill still waited to be passed, the timing of a tough play to the
financial industry could not have been more right.
U.S. President Barack Obama delivers
remarks about executive compensation at the White House in Washington Feb.
4, 2009. (Xinhua/Zhang Yan) Photo
Gallery>>>
WASHINGTON, Feb. 4 (Xinhua) -- The Obama
administration on Wednesday imposed a pay cap of 500,000 U.S. dollars for top
executives at companies that receive the government bailout money to weather the
current financial crisis.
The new rule came out amid rising public fury about
huge pay packages for executives at financial companies being propped up by
federal tax dollars. Full story
U.S. President Barack Obama (R) delivers
remarks about executive compensation as Treasury Secretary Timothy
Geithner looks on at the White House in Washington Feb. 4, 2009.
(Xinhua/Zhang Yan) Photo Gallery>>>
WASHINGTON, Jan. 29 (Xinhua) -- U.S. President Barack
Obama was outraged on Thursday by Wall Street's multi-billion-dollar bonuses for
2008, which he said was "shameful."
"It is the height of irresponsibility. It is shameful,"
said Obama after talks with Treasury Secretary Timothy Geithner at the White
House. Full
story
WASHINGTON, Feb. 3 (Xinhua) -- U.S. President Barack Obama
said Tuesday that the United States cannot send a protectionist message to the
rest of the world.
He cautioned Congress that any protectionist
provisions that could trigger a trade war should not be included in the final
version of the economic stimulus plan. Full story
WASHINGTON, Feb. 3 (Xinhua) -- U.S. President Barack
Obama on Tuesday nominated Republican Senator Judd Gregg as commerce secretary
in his cabinet.
If confirmed, Gregg, a senator from New Hampshire in
his third term, will become the third Republican Obama enrolled in his cabinet,
following Defense Secretary Robert Gates and Transportation Secretary Ray
LaHood. Full story
WASHINGTON, Jan. 28 (Xinhua) -- The
Democratic-controlled U.S. House of Representatives on Wednesday approved
President Barack Obama's 819-billion-dollar economic stimulus plan, which melds
new spending and tax cuts to jump-start the economy.
The House measure combines roughly 275 billion
dollars in temporary tax cuts for both individuals and businesses along with
about 544 billion dollars for job-creating investment projects, health industry
improvements, expanded aid for the poor and unemployed, and improving
education. Full story
