A Dream for a Better World

Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens. As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds. The conditions are necessary to prevent Wall Street executives from paying lavish bouses and buying corporate jets.  Some bankers say the conditions have become so onerous that they want to return the bailout money.  They say they plan to return the money as quickly as possible or as soon as regulators set up a process to accept the refunds.

Executives at Goldman Sachs Group Inc., JPMorgan Chase & Co. and hundreds of financial institutions receiving federal aid aren’t likely to be affected by pay restrictions announced February 15th by President Barack Obama.  The rules, created in response to growing public anger about the record bonuses the financial industry doled out last year, will apply only to top executives at companies that need exceptional assistance in the future.  The limits aren’t retroactive, meaning firms that have already taken government money won’t be subject to the restrictions unless they have to come back for more. Pay caps may provide the political cover the administration needs to deliver additional infusions of capital into the financial sector.