Tags: obama | pay | cap | meaningless

Obama Pay Caps Toothless, Experts Say

By    |   Friday, 06 Feb 2009 10:03 AM

President Obama’s shot over the bow at Wall Street bigwigs by restricting their pay will have little real effect.

Capping salaries at $500,000, for instance, will apply only to a few officials and excludes the top traders, brokers, and salespeople, who can reel in monstrous pay packages.

“You've got a lot of people on Wall Street who are not executives but still make extremely big salaries,” Mark Borges, a principal at compensation consulting firm Compensia told Huffington Post.

“I suspect this doesn't impact them at all.”

Also, the rules only apply to firms that receive “exceptional assistance” from the government, yet they don’t specify what constitutes such assistance.

For instance, the rules as stated mean that government handouts similar to those given to JPMorgan Chase and Wells Fargo — $25 billion each — wouldn’t necessarily trigger a salary cap.

Executives at Goldman Sachs and JPMorgan probably won’t be affected either, Bloomberg reports.

But the more expensive emergency bailouts, such as the $100 billion allocated to AIG and the $40 billion given to each Citigroup and Bank of America, do qualify as “exceptional assistance.”

Still, overall the limits don’t mean much. Stock options and other forms of delayed pay won’t be limited at all. Banks can give their executives any amount of depressed stock — stock which lost value under the watch of these same executives — to be cashed out later.

“They’re just allowing companies to defer compensation,” Graef Crystal, a former compensation consultant, told Bloomberg.

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President Obama’s shot over the bow at Wall Street bigwigs by restricting their pay will have little real effect. Capping salaries at $500,000, for instance, will apply only to a few officials and excludes the top traders, brokers, and salespeople, who can reel in monstrous...
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2009-03-06
Friday, 06 Feb 2009 10:03 AM
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