Just a few days after Sen. Claire McCaskill (D-MO) introduced a bill that would cap executive pay at companies receiving bailout money at the President's salary ($400K), President Barack Obama plans to announce his own pay limit rules.
Obama plans to announce the new limits with Treasury Secretary Timothy Geithner at the White House on Wednesday. The caps would limit executive pay to $500K at companies that receive "exceptional assistance" in the future. This policy will not be retroactive.
An administration official, speaking to AP on the condition of anonymity because the plan had not yet been announced, said firms that want to pay executives above the $500,000 threshold would have to compensate them with stock that could not be cashed in until the company pays back any taxpayer money.
Obama, speaking to CNN Tuesday, said the following:
"There are mechanisms in place to make sure that institutions that are taking taxpayer money are not using that money for excessive executive compensation. It's not a government takeover. Private enterprise will still be taking place. But people will be accountable and responsible. And that's what we have to restore in the financial system generally."
Interestingly, it seems like Obama will face little GOP opposition to the plan. Many Republicans are angry over the massive waste and bonus expenditures made by firms receiving bailout money.
Sen. Richard Shelby of Alabama, the top Republican in the Senate Banking Committee said:
"In ordinary situations where the taxpayers money is not involved, we shouldn't set executive pay. But where you've got federal money involved, taxpayers' money involved, TARP money involved, and the way they have spent it, with no accountability, is getting close to being criminal."
Certainly, most Americans would probably agree with a cap on firms taking bailout money; it is, after all, taxpayer money.
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