My FT column this week is on today’s announcement of a $500,000 salary cap for executives of financial institutions that get into serious trouble and are bailed out by the US government. I think it is both inevitable and justified:
The New Yorker once carried a cartoon of a man in a suit talking on the telephone: “No, Thursday’s out. How about never – is never good for you?” he was asking.
These days, I imagine that man as a federal regulator talking to the head of an investment bank: “No, a $30m bonus is out. How about nothing – is nothing good for you?”
Who would not like to be that regulator, getting the chance finally to tell a master of the universe that he must step off his private jet and take his place in normal society? Not many, I think.
Barack Obama’s decision to impose a salary cap of $500,000 on the senior executives of financial institutions, including Wall Street banks, that need public money to prop themselves up is rough justice. There are objections, from the undesirability of politicians fixing wages to the barriers it could erect to financial recovery.
Ultimately, however, none of this matters because, rough as it is, it is also justice. The average US taxpayer, who earns $40,000 a year, has been asked to rescue institutions that he distrusts and resents, which have helped to bring chaos to the global economy. If the price of bail-outs being approved is some wage caps, the price must be paid.
You can read the rest here and comment below.
