Pay Cuts

The NYT reported tonight that the Obama administration is going to reduce executive compensation at the some of the corporations that were bailed out during the financial crisis:

WASHINGTON — Responding to the furor over executive pay at companies bailed out with taxpayer money, the Obama administration will order the firms that received the most aid to slash compensation to their highest-paid employees, an official involved in the decision said on Wednesday.

The plan, for the 25 top earners at seven companies that received exceptional help, will on average cut total compensation this year by about 50 percent. The companies are Citigroup, Bank of America, American International Group, General Motors, Chrysler and the financing arms of the two automakers.

This is fine, as far as it goes, but there are two problems.

One, it does nothing for those companies which were indirectly bailed out by the government, and which are still using taxpayer funds to gamble with, and are paying themselves obscene bonuses with their ill-gotten gains. (Yes, Goldman Sachs, I'm looking at you.)

Two, it distracts from the real regulatory reform issues that need to be addressed. And this, is not a bug, but a feature.