It seems clear the global credit crisis is pretty serious. There are two things that really need to be talked about:
- How to recover and get things back on track
- How to prevent it happening again (or at least not as severely).
So far governments have pretty much thrown money at the problem. Opinion seems divided as to whether that's any kind of a solution, let alone a band-aid.
Perhaps what we need is a bit more of stuff like this:
There could be more on the way, according to an unamed official reported in the same story:The Obama administration plans to limit pay to $500 000 a year for executives of government-assisted financial institutions in a new get-tough approach to bankers and Wall Street, a senior administration official said.
Obama plans to announce the new limits with Treasury Secretary Timothy Geithner at the White House on Wednesday.
"If the taxpayers are helping you, then you've got certain responsibilities to not be living high on the hog," United States President Barack Obama said in an interview with NBC Nightly News.
full story from M&G here
Of course, such proposals are not going to be without resistance:The administration will also propose long-term compensation restrictions even for companies that do not receive government assistance, the official said.
The proposals include: requiring top executives at financial institutions to hold stock for several years before they can cash-out; requiring that pay plans be submitted for nonbinding shareholder resolutions; and a Treasury-sponsored conference on a long-term overhaul of executive compensation.
Hmm. I reckon there needs to be some form of moderating influence in all of this. It's the lack of moderation that got us into this mess.Compensation experts in the private sector have warned that such an intrusion into the internal decisions of financial institutions could discourage participation in the rescue programme and slow down the financial sector's recovery. They also argue that it could set a precedent for government regulation that undermined performance-based pay.
What do you think, and do you have any creative suggestions?