The Obama administration is considering cutting executives’ pay at firms receiving federal aid in order to improve the public’s perception of the bailout strategy, the Wall Street Journal is reporting.
Financial institutions that have received “exceptional” aid from the federal government would have limits placed on executive bonuses and severance plans.
Meanwhile, Wall Street firms are anticipating to receive more than the remaining $350 billion set aside in the federal government’s $700 billion bailout plan.
It’s a little troubling that limiting the pay of executives whose companies have taxpayer funds is seen as a public relations move. Years ago it would have been just good business sense.
The term “exceptional” aid is vague (likely intentionally) and could apply to several businesses such as financial giant Citicorp, insurance giant AIG and carmaking giant General Motors. When giants like these demand a handout, well, they’ve got mighty big hands to fill.
Economists say that more than the remaining $350 billion in bailout funds is needed to stimulate the economy. That’s encouraging and reassuring. Apparently they think there is more than $350 billion left in the federal treasury.