President Obama has reacted to the excess payments on Wall St by proposing to limit salaries to $500,000 for senior executives of banks which get a bail-out. It won't be retrospective, so those who have already received a bail-out can keep their bonuses.
President Obama won't restrict the size of stock options as bonuses, however executives will need shareholder agreement for bonuses and won't be able to cash in their shares until after the bank has repaid the Federal Government.
The restrictions are in response to the ever louder indignation from taxpayers who have footed the bill for under-performing executives whose businesses lost billions while the executives received massive bonuses, despite making massive losses.
More in the
NYTimes.
I seem to remember someone on Wall St referring to that very sum as 'the poverty level' in New York, and also another person mentioning $400,000 as the poverty level in Washington. I know things are expensive, but really. Then again my father favoured his
home in Mandurah in Western Australia which ranks equal 6th with Los Angeles, and slighty cheaper than San Diego as San Jose falls down the list. My in-laws live on Queensland's Sunshine Coast which is right up the top of the list, while my brothers live in
Perth, which co-incidentally ranks with London for affordability.
Australia currently ranks as the least affordable nation on earth for housing with my hometown Sydney the most expensive.
I guess they won't be relocating any of those US banks to Sydney, if you think New York is expensive you'll find that $500,000 won't maintain much of a lifestyle in Sydney, although you might manage a mortgage on a small place and have no life.
President Obama's objective is to get performance based renumeration back in vogue, and seeing how long it might take some of the bailed-out institutions to repay their debt, perhaps we'll need to see a new breed of younger bankers, or at least those with
a life expectancy long enough to cash in their bonus shares.
PS. a
follow-up story in the NYTimes