New York (HedgeCo.Net) – As the Obama administration prepares to distribute the remaining $350 billion in the Troubled Asset Relief Program, a new requirement will ensure that the salaries of top executives be capped at $500,000 a year.
“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said at a White House press conference.
While last year saw a handful of top financial organizations crumble amidst record write downs and unsustainable losses, companies continued to dole out bonuses to those in high positions. Even as the first half of the TARP funds were distributed by the Bush administration, the public demanded transparency for fear that taxpayer money was being used to pad the paychecks of the ultra wealthy; the individuals whose greed was no doubt responsible for the financial meltdown in the first place. It was estimated that the banks receiving bailouts paid their top officials $1.6 billion in salaries and bonuses last year, according to the Associated Press.
Merrill Lynch CEO John Thain took home a record $83 million in 2008, despite taking $10 billion of taxpayer-funded government aid to keep his company afloat. Lloyd Blankfein, CEO of Goldman Sachs, pocketed $54 million while the company shelled out $242 million to their top five execs. Jamie Dimon of JPMorgan Chase, on the other hand, pocketed a mere $1 million while forgoing any bonus.
Treasury Secretary Tim Geithner was also on board with the new plan, saying that our economic woes were “made worse by a loss in faith,” referring to the gluttony of these top execs. While the plan cannot retroactively take back bonuses that were awarded with the first half of the TARP funds, provisions will likely be set in place that can reclaim compensation from senior executives if they are discovered engaging in any fraudulent practices.
In addition to outlining the plan, Obama urged Congress to finalize the economic stimulus legislation, saying that any delays “will turn crisis into a catastrophe and guarantee a longer recession.”
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