On Oct. 22, the Obama administration, through the Treasury Department and Federal Reserve, announced plans to limit pay for a small number of Wall Street executives. According to the new rules, the salary of 25 top-level executives each at seven companies that received the greatest amount of bailout money from the government will be cut by about 50 percent.
 Bank of America CEO, Kenneth Lewis had his 2009 pay and bonuses cut, but walks away with at least $125 million in tax-payer funded benefits |
According to Kenneth Feinberg, the administration’s “pay czar,” the executive bonuses have been cut in order to keep the companies “viable.”
In other words, the principal reason for the cuts is not to punish capitalists, but to rescue and save the bailed-out capitalist giants from their own CEOs on behalf of the stock holders.
The Federal Reserve will monitor other executive salaries at banks but will not set any limits on that pay.
The seven companies affected by the Treasury Department plan are Citigroup, Bank of America, AIG, General Motors, Chrysler, GMAC and Chrysler Financial. Combined, these companies received over $230 billion in government bailout funds.
Citigroup CEO Vikram Pandit made $10.82 million in 2008, while the company received $45 billion from the government. Bank of America’s CEO Kenneth Lewis is stepping down at the end of 2009 amid controversies over executive compensation. Lewis has made headlines by proclaiming he will not take a salary for 2009, yet he will still walk away from Bank of America, which received $45 billion in bailout funds, with a retirement package worth $125 million, including $53.2 million in retirement benefits and $72.8 million in accumulated stock and other compensation.
The seven companies affected are just a small sample of those that received bailout money and do not represent all of those that received the most excessive funds. Goldman Sachs and J.P. Morgan Chase, which received $10 billion and $25 billion respectively, are subject to absolutely no oversight of their executives’ salaries. Supposedly, the two institutions paid back their bailouts. But it is entirely unclear at this point how, so soon after escaping extinction, they were able to do so in the current economic climate other than by engaging in a lot of “creative” bookkeeping.
By cutting salary and perks for 175 individuals, the Obama administration is trying to redirect workers’ very correctly placed anger at those who run the capitalist system. The government has spent trillions of dollars to prop up the capitalists and save them from collapse.
At the same time, the government has done nothing to prop up workers. The official unemployment rate is at 9.8 percent. Foreclosure rates continue to rise, and the “debate” on health care reform has not culminated in a universal system that could cover all workers.
Now Washington, after giving over $9 trillion to save Wall Street corporations—the very institutions that caused the crisis—is stepping in to save the capitalists from themselves by announcing that they will curtail a few executives’ pay.
In his role as the CEO of the most powerful capitalist state in the world, Obama and his administration are responsible for ensuring that the capitalists are allowed to continue making their profits. Aiding, protecting and bailing out the banks and Wall Street at the expense of workers is simply the common state of affairs.
The extraordinary measure of limiting executive pay has become necessary due to the nature of the economic system itself. Capitalism means that the wealthy few cash in on the labor of the many with government assistance, even more so in times of severe economic crisis for workers.
The need for government-imposed restraint on executive salaries at tax-payer bailed out institutions—however small the pay limits are—pulls back the curtain and exposes the ruling class of bankers and billionaires for what they are: the most powerful gang of thieves on the planet.
