Reigning in Wall Street

After publicly criticizing Wall Street for paying employees $18.1 billion in bonuses for 2008 (see Wall Street Arrogance), President Obama announced plans to limit compensation for executives at banks will receive assistance at taxpayers' expense to $500,000.

Full details have not yet been released, but at this point it appears the gesture is largely symbolic. It's been reported that this only applies to the top five executives in each company, and would not be applied to those firms that have already received assistance from the Troubled Asset Relief Program (TARP). Setting aside the opinions of those that will cry "government interference" and "socialism" at this latest move, this doesn't go far enough. If a bank takes TARP money, they should expect the government to control excessive spending, at least under this administration.

Obama is astute enough to understand the outrage of taxpayers reading about $50 million jets and million dollar bonuses, and this has put him in a difficult position. Next week the White House will release a bank bailout plan (in addition to the $825 billion stimulus plan working its way through Congress) with a two or three trillion dollar price tag. Obama needed to try to get the bonus issue out of the way first to avoid public outrage.

Someone will sit down in the next few days and calulate that the new limitations would have reduced $18.1 billion to something like $17 billion, and this will then be seen as only a token effort. A step in the right direction, perhaps, but not enough to calm taxpayers that have suffered as a result of Wall Street greed.

I've already resigned myself to the liklihood that I won't like the bailout plan. Obama doesn't have any good choices at this point. He can only play the hand he's been dealt.

P.S. The misspelling of "reining" is purely intentional.