One reason a majority of Americans are opposed to federal bailouts of struggling financial companies — and major industrial companies as well — is the excessive pay packages that are common at the top management level — even when the performance of their businesses suggest no reward would be appropriate.
It became a topic of debate a few months ago when we learned that companies that were key players in the risky loans that led to the mortgage crisis were doling out millions of dollars in bonuses and stock options even as their actions were driving the economy into the tank. The Washington Post reported Monday that although Congress had wanted bailed-out companies to put limits on executive compensation, a last-minute stipulation sought by the administration has given companies a way around that requirement because of the way the Treasury Department has chosen to distribute the funds.
“The flimsy executive-compensation restrictions in the original bill are now all but gone,” Republican Sen. Charles Grassley from Iowa, the ranking Republican on the Senate Finance Committee, told the Post.
The bailout legislation was the product of a hurried legislative body scrambling to meet a crisis, and the loopholes that were left open are beginning to appear. Congress needs to act soon to close them, so the companies that benefit will be forced to do business more responsibly. At a time when millions of Americans are worried about losing their jobs, if they haven’t already lost them, top executives must adjust their lifestyles to share the pain.