Bailout Unpopular

To say that the US bailout was unpopular would be gross understatement. Despite a flood of calls, emails, and letters from constituents both the Senate and the House passed the $700 billion dollar bailout package. Part of the anger was over the millions that executives in failed financial institutions received despite poor performance. When the news broke that AIG executives had treated themselves to a $400,000 bailout party at taxpayer’s expense, demands for curbs on executive compensation were heard in congress.

Politicians Speak Out

Treasury officials have argued privately that banks that receive direct cash infusions should be exempt from the toughest executive pay restrictions. Most politicians disagree. In a letter to Treasury Secretary Paulson, Senator Charles Schumer of New York stated, “Restrictions on executive compensation will ensure that taxpayer money is not wasted enriching the same people whose poor decision-making created this crisis.”It is imperative that these restrictions, including limitations on the incentives for executives to take excessive risks and the elimination of golden parachutes, should apply to any capital injection program.” Treasury officials declined to comment on their position. Many in the US blame Wall Street for the dire economic straits the US finds itself in and fears of a recession have fx traders and investors uneasy.

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