President Barack Obama & Treasury Secretary Timothy Geithner Speaking About Executive Compensation

Although Obama’s term as president is only in its infancy, he’s already impressed me in many ways. First was his ability to quickly put together an extensive stimulus plan (which took far too long for Canada to do) and then his plan to close Guantanamo Bay within a year. Now, it’s his idea to impose a salary cap for many U.S. business executives.

Obama’s plan is to place a $500,000 salary cap on executives at troubled U.S. financial institutions that accept federal bailout funds. And it’s a brilliant idea.

Here’s an excerpt from Obama’s announcement:

This is America. We don’t disparage wealth. But what gets people upset and rightfully so is executives being awarded for failure. Especially when those rewards are subsidized by U.S. taxpayers, many of whom are having a tough time themselves.

In order to restore our financial system, we’ve got to restore trust. In order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street.

We all need to take responsibility and this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves their customary lavish bonuses.

Obama hit the nail on the head, and I couldn’t agree with him more. I’m sick of hearing about U.S. executives being rewarded with taxpayer dollars for their failures. That’s why I opposed bailing out the auto industry a while back.

Obama’s plan, though not yet implemented, has already had positive effects. Wells Fargo who had booked 12 night stays at two of the most expensive hotels in Las Vegas for a sales retreat abruptly cancelled the trip. Not surprisingly, the company received $25 billion in bailout money and recently announced a $2.3-billion loss for the fourth quarter of 2008.

I like the fact that Obama plans to force accountability on U.S. executives making ridiculous salaries financed by taxpayers. I’d like to see Harper follow suit and institute the same salary cap here. It’s a good idea, and it’s going to work. May the accountability begin.

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Tags: bailout, barack obama, executives, harper, salary cap

This entry was posted on Thursday, February 5th, 2009 at 2:59 am and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.