This article interestingly explains that forcing financial companies to curb CEO's pay for government assistance may actually extend the crisis because they may not take the offer.
What’s the danger in the reported Obama plan? The most common argument is that excessive restrictions on what top executives earn could drive away talent from the companies that perhaps need a bailout the most. Why take a job at a place that’s in need of a turnaround if there’s little reward at the end of the day?
In addition, tight executive pay limits threaten to draw a bright line between healthy banks and non-healthy banks, causing investors to flee the latter group.
However, if the executive compensation limits are too strict, banks that are in desperate need of taxpayer cash just to stay afloat might be the only ones to accept TARP funding.
By Brian Wingfield
Read More: Forbes
Posted by Jemar Souza
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