President Obama unveiled a new set of rules Wednesday aimed at reining in the pay of executives at companies that receive government bailout money. The move comes after public outrage over the multibillion dollar bonuses that Wall Street executives continued to receive, even after their failing firms took taxpayer money.
The new rules include a salary cap of $500,000 — a fraction of what Wall Street executives are used to getting. In addition, stock options can't be paid out until the companies pay back the taxpayer money they've taken. Giant severance packages will also be banned.
"We're taking the air out of the golden parachute," Obama said in making the announcement at the White House.
The president issued a call for restraint with this acknowledgement: "This is America. We don't disparage wealth. And we believe that success should be rewarded. But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers, many of whom are having a tough time themselves."
The new rules would not be applied retroactively to companies that have already received aid, but they will apply to firms that receive "extraordinary" help from the government in the future.
One concern about the new rules is that they may discourage executives from taking jobs at financial firms that need their expertise.