Thursday, February 05, 2009

Obama ends Wall St's bailout bonuses

Last year, the US government spent US$700 billion bailing out its rotten financial sector. Top executives immediately used the money to pay for bonuses, golden handshakes, and other perks. Now, the other shoe has dropped - hard: President Obama has capped executive salaries at bailed-out firms at US$500,000.

Naturally, the market fundamentalists are screaming, arguing that this will lead to executives leaving those companies and taking their "talent" elsewhere. Good. After all, they're the people whose greed caused the mess in the first place. Meanwhile, a principle has been firmly established: if you receive public money, you have to use it in the public interest. And maybe if its their personal pay on the line, executives will be less keen on running their companies into the ground and then going begging to the government for a handout. Just think of it as an incentive...