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Should Obama Limit CEO Compensation?

By Erik Folgate

Yesterday, President Obama announced that he would limit CEO compensation of private corporations that received bailout money from the federal government. The moment that a private company receives government money, they are taking taxpayer’s money. The government doesn’t have their own money. They have our money. So, Obama and many Ameriicans want this bailout money being used responsibly by these private corporations. They don’t want them using the money for executive bonuses, vacation retreats, and corporate jets. I agree and disagree with this issue.

Why I Agree With What Obama Did

If financial institutions, automakers, and other private corporations want to beg for government bailout money because it’s the easy way out of their problems, then the President has every right to impose regulations and limitations on them. What are these executives going to say? They were the ones that were too lazy to figure out a way to save their companies, so they looked to the government. The government was glad to help, because they knew that it would expand their power over the financial sectors. Obama is merely flexing his muscles now that the country owns a piece of the financial sector.

Why I Disagree With What Obama Did

This is one step closer to nationalizing banks. Again, this isn’t “Obama’s fault”, and I don’t fault him for what he did, because it’s the executive’s faults for asking for the money in the first place. No company is too big to fail. Companies will come and go, and the ones that make mistakes will sometimes fail. The ones that do not provide good customer service and a good product will not survive. These financial institutions should have merged together and bought each other out. That would have been the sensible thing to do. They could have come together, re-organized, re-structured, and split back up when they got their crap together. Instead, they looked to Uncle Sam, and now Uncle Sam is saying “Waaaiiiiiitttttt a minute”, you’re not getting that money with no stipulations.

What’s your take on this? Is this one step closer to nationalizing banks? Do you think executives deserve the pay they receive? Does Obama have the right to limit their compensation? I think he does, but it scares me that he does have that right.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • mack

    I completely agree with this move. I’ve always believed that infrastructure such as finance, transportation, public utilities, and energy(Exxon’s $45 billion dollar profit at our expense) should be more tightly federally regulated. A problem or flat out greed in any of those industries has the power to bring the United States to a grinding halt. I think Obama’s on the right track. As far as a national bank, I believe it would be far better for consumers than it is now. Remember, banking is a business and besides credit unions they’re in it to make a profit.

  • author

    Mack, I appreciate your opinion, but I don’t agree with it. I think the stimulus bill needs to be revised to include more money for actual infrastructure development, but this one does not.

    regarding your last comment that banks are in it to make a profit, I don’t understand that comment. Are you saying that making a profit is a bad thing? Motivation to earn a profit is not the problem. The people in the financial industry and other industries that let greed and corruption take them over are the problem. the people are the problem, not the system.

  • DG

    I want to say yes because it’s absurd how much money these people make and then they are begging congress for money to help their companies. however, I think obama’s limit is too low. many ceos really spend a lot of time working and they take risks so there should be some reward for people who take risks and succeed. however, big time bonuses should not be the standard

  • http://madsaver.com Mac

    I think this issue is a no-brainer. As the federal gov’t actually owned a large chunk of these corporations via the bailout, they can limit salaries as they wish. It’s always shocking to hear how much some of these companies lost each year and compare that with the ever-increasing CEO salaries. Doesn’t make a whole lot of sense.

    • http://madsaver.com Mac

      I’ll go a step further and say that the CEO’s should have given back any bonuses they so-called “earned” in the past few years. I don’t think Obama did enough about the mis-management of these companies and did too much in bailing them out.

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