It's been a rough year for Wall Street and the American taxpayers, as billions have been distributed to assist failing institutions. Of course, if the tremendous salaries and lavish perks of these corporate executives is any indication, not all of the money distributed through various bailouts has been in accordance with the interests of the average American in mind. But this situation is set to change soon.
Today President Obama and Treasury Secretary Timothy Geithner announced the beginning of more regulations surrounding the federal dollars given to companies that have been bailed out by the government. Now corporate executives at companies receiving "extraordinary help from U.S. taxpayers" will have their salaries capped at $500,000 each year.
The president says this action isn't to punish success. "This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success. 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."
He says today's guidelines are only the beginning of an upcoming strategy to encourage corporate responsibility, which he views as "fair and basic common sense."
Naturally, many of the corporate executives who are making tens of millions a year, even if their salaries have been propped up by the taxpayers, don't quite see eye to eye with the president. You could make the argument that this extra government involvement disrupts the capitalist system, but in a purely capitalist system, these institutions wouldn't have received government assistance in the first place.
On the other hand, getting rid of the bonuses and extra compensation might also discourage the most talented businesspeople from working with the companies that might need the most help.
Regardless, these regulations should hearten the vast majority of the taxpayers who will never see salaries anywhere even close to $500,000 annually. Whether this action encourages more widespread financial responsibility nationwide remains to be seen.