THIS much can be said for President Obama's action in limiting compensation for senior executives of financial institutions that go back to the public for more bailout money: Wall Street had it coming.
The American people have been reminded of corporate cluelessness a lot lately - the $18.4 billion in bonuses paid out by New York financial houses in a calamitous economy, the Super Bowl fan fest put on by Bank of America, the Palm Beach conference hosted by Morgan Stanley, the aborted plans of Wells Fargo to reward employees in Las Vegas, the $50 million jet for Citigroup cancelled only after The New York Post shamed senior management.
They don't get it, but now they might. Some critics inevitably will call this creeping socialism, but in fact Mr. Obama's order does not go all that far. It does not apply to those institutions that have already received bailout funds, only to those that seek aid under the next phase.
Indeed, only a handful are said to be affected, the likes of AIG, Citigroup, and Bank of America. In the beggar class of financial institutions, senior executives will be limited to an annual salary of $500,000, which might seem a lot to most Americans but is not much by the standards of Wall Street.
Executives can still receive restricted stock as compensation, but it can't be sold until the government gets its money back or until the institution is back on its feet. The President's action also takes the air out of golden parachutes for executives at retirement.
No doubt clever attempts will be made to get around the spirit of Mr. Obama's directive.
It is also possible that some executives will leave their current posts - or be hired away - to work at corporations where the sky remains the limit for executive compensation.
But the new rules also will serve several beneficial purposes - discouraging any gold rush to get a bailout and striking a blow for ordinary Americans. Figuratively, the little guy has been forced to tighten his belt while the big guys have gone out and bought silver suspenders.
Yet, for as much as this is a populist move, Mr. Obama tellingly did not play to class envy. Instead, he emphasized what might be called public responsibility. "This is America," he said. "We don't disparage wealth. We don't begrudge anybody for achieving success. "
But he said people rightfully get upset when executives are rewarded for failure, especially when they are subsidized by the taxpayers.
Absolutely. And as the adage says, he who pays the piper calls the tune. Now that the government has paid the pipers, the business executives have no complaint that Mr. Obama is making them face this music.