Obama announces executive pay caps of $500,000

The move comes in response to public outrage over fat paychecks for the leaders of companies getting government money.

Barack Obama 88 (photo credit: )
Barack Obama 88
(photo credit: )
President Barack Obama on Wednesday announced $500,000 pay caps for financial executives whose firms take a federal bailout, responding to public outrage over fat paychecks for the leaders of companies getting government money. The president was reacting in part to reports last week that Wall Street firms shoveled out more than $18 billion in 2008 year-end bonuses even as the industry took billions in government rescue money to prevent a feared collapse of the US financial system. The announcement comes as Obama tries to right himself the day after setbacks in which two of his top government nominees withdrew over tax problems. He is also struggling to pass a gargantuan stimulus package with bipartisan support in business-as-usual Washington, and to set strict rules for how the second half of the $700 financial system bailout is dispersed. Obama took direct aim at top corporate leaders Wednesday. "We all need to take responsibility," he said in the White House foyer. "And this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves their customary lavish bonuses." A White House statement issued in conjunction with the announcement said the new regulations would ensure that executive pay in the financial community "is closely aligned not only with the interests of shareholders and financial institutions, but with the taxpayers providing assistance to those companies." Obama took on the huge salaries and bonuses paid to American financiers a day after his economic message was overshadowed by the surprise announcement that former Sen. Tom Daschle was withdrawing his nomination for a key Cabinet post under the cloud of a big tax problem. He withdrew only hours after Nancy Killefer pulled her candidacy to be the first chief performance officer for the federal government, saying she didn't want her failure to submit payroll taxes for household help to be a distraction for the president. Obama is battling against the nation's worst economic crisis since the Great Depression of the 1930s, which the White House is attacking with both the bailout and the economic-stimulus bill now wending through the Senate. The president warned Congress Wednesday that the recession would turn into "a catastrophe" if the stimulus is not passed quickly, lobbying anew for the plan as its price tag climbed above $900b. and drew more criticism. "I reject that theory, and so did the American people when they went to the polls in November and voted resoundingly for change," Obama said. "So I urge members of Congress to act without delay." The president rejected several complaints about the plan, including arguments that tax cuts alone would solve the problem or that longer-term goals such as energy independence and health care reform should wait. Obama opposed such piecemeal approaches. Instead, he argued that recalcitrant lawmakers need to get behind him, saying the American people embraced his ideas when they elected him president in November. While urging members of Congress to act swiftly, he also promised to make changes to the legislation, which has been criticized as larded with spending that won't have an immediate impact on the economy. "No plan is perfect, and we should work to make it stronger," Obama told reporters at the White House. "Let's not make the perfect the enemy of the essential. Let's show people all over our country who are looking for leadership in this difficult time that we are equal to the task."