CEO pay: The new, $500,000 limit

“Is this any way to treat our best and brightest?” said Harold Meyerson in The Washington Post. “Damn straight it is.” Since President Obama announced last week that top executives at banks receiving federal bailout funds will have their salaries capped at $500,000, Wall Street’s fat cats have been crying, “Socialism!” Can they be serious? In recent years, the average CEO salary has skyrocketed from 24 times the pay of the average worker to 275 times. There’s no principle more fundamental to this nation than the exchange of a fair wage for an honest day’s work, and if “the guys who ran our banking system into the ground” are going to accept hundreds of billions of dollars in taxpayer welfare, they should expect a little populist payback.

“There’s no sense trying to defend” the astronomical salaries of Wall Street executives, said Thomas McClanahan in The Kansas City Star, but “the larger issues raised here are troubling.” Once we agree to let a politician sitting in Washington, D.C., determine the salary of a banker in New York, it’s only a matter of time before the politician starts pressuring the banker “into making questionable loans to politically preferred recipients,” and before you know it you have a nationalized banking system, and a corrupt one at that. There’s a more immediate problem, said Charlie Gasparino in TheDailybeast.com. Like it or not, talented financial executives can still command far more than $500,000 a year. In the end, Obama’s salary cap will serve only to drive the best executives away from struggling banks.

You mean the same talented “executives who got us into this mess?” said the San Francisco Chronicle in an editorial. Heaven forbid we lose their visionary leadership. No, the only real problem with Obama’s proposed salary-cap rules is that “the restrictions don’t go far enough.” Firms that have already received bailout funds are exempt, and there are no restrictions on executives being paid in shares. But even if the salary cap does end up having more of a symbolic impact than a practical one, that doesn’t make it a failure, for we could use a little symbolism. “While families are losing their homes, workers are losing their jobs, and taxpayers are footing the bill for the enormous errors made on Wall Street,” it would be nice to see bank executives accustomed to $20 million incomes share in the suffering. That is, if you think making $500,000 is suffering.

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