New bill seeks to cap payouts by Wall Street firms
31 Jan 2009
Even as financial institutions collapsed around the world, dragging investors and employees down to penury, several senior executives have managed to secure themselves with generous bonuses. Even though several of them have declined such obscene payouts in recent times, the anger exists.
Bank of America is reported to be under pressure to reduce its payouts after New York Attorney General Andrew Cuomo subpoenaed bank executives earlier during the week asking for information pertaining to compensation.
President Barack Obama, too, has termed bonuses awarded by banks as something that represent "the height of irresponsibility." The president was reacting to a report by the New York state comptroller that found financial executives had received an estimated $18.4 billion in bonuses for 2008, less than for the previous several years but the same level as they received in 2004.
In a toughening of position, the new administration has made it clear that it intends to go beyond merely issuing harsh rebukes to check irresponsible behavior of Wall Street companies. On Friday, Democart senator Claire McCaskill, of Missoure, introduced legislation to cap the salaries of executives of companies that have received federal bailout funds. The limit applies to salary, bonuses and stock options, and caps total amount to the amount of money earned by the US president, ie, $400,000.
Introducing the legislation in the Senate, an angry McCaskill lashed out at Wall Street: "We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer. They don't get it. These people are idiots. You can't use taxpayer money to pay out $18 billion in bonuses," said McCaskill.
Meanwhile, Robert Gibbs, Obama's press secretary, said the president's plan would also address executive compensation and bonuses. He said the president and his economic team would outline a plan to curb what he had earlier described as ''irresponsible.''
That the `Cap Executive Officer Pay Act', as the McCaskill bill has come to be called, has received wide support from the general public is evident form the enormous wave of telephone calls and messages to her office, but analysts discount the possibility of it passing.
Analysts say that the Obama administration is unlikely to go ahead with the McCaskill bill to impose restrictions on executive pay on firms receiving aid under the government's $700 billion financial rescue programme.
