During final negotiations on the $787 billion economic recovery package last week, Senate Banking Committee Chairman Chris Dodd (D-CT) “slipped in a provision to limit bonuses for executives at institutions receiving government bailout funds to a third of their salaries.” The limits go beyond what President Obama had proposed. The caps also apply to a wider circle of employees at financial firms, rather than just the senior executives.
The White House is concerned that the stringent limits “could prompt financial institutions to repay the government too quickly.” Financial firm lobbyists are also worried that they will lose personnel, “driving talented employees to companies that aren’t subject to the regulation or to overseas banks.”
On the Sunday shows this morning, White House aides David Axelrod and Robert Gibbs indicated that they wanted Congress to loosen the executive pay provision. On Fox News Sunday, Axelrod said the White House plans to work “with the Senate to come up — and the House — to come up with an appropriate approach to this.” On Face the Nation, Gibbs similarly said, “We look forward to working with Congress as we go forward on all measures of executive compensation,” but wouldn’t say whether the White House is “satisfied” with the pay limits.
It doesn’t appear Congress is too willing to revise its legislation, however. On Face the Nation, Republican Sen. Richard Shelby and Democratic Rep. Barney Frank both expressed their approval of the executive pay limit:
SCHIEFFER: So, even though you voted against this bill, you sound like you’re very much for this provision.
SHELBY: I — I am. I think we need that. [...]
FRANK: Let me be very clear. Mr. Gibbs may not like it, but it’s gonna be enforced. … This is not an option. This is not, frankly, the Bush administration where they’re going to issue a signing statement and refuse to enforce it.
Commenting on the issue of “executive compensation,” The New Yorker’s Hendrik Hertzberg recently wrote, “I have to say, I get a little dizzy with disgust whenever I hear that word used to describe some C.E.O.’s pay envelope. … What, exactly, are these people being ‘compensated’ for? Are they victims of crime? Or is it the long hours, the loneliness, the inability to spend time with their children—so much more terrible than the plight of a middle-aged immigrant mother working double shifts as an office cleaner?”