The great hope that swelled with Barack Obama’s election is in danger of curdling into disappointment and anger. Too many outrages have accumulated without convincing responses from the government. Too many grand prospects are shriveling into small-bore results. The president cannot fairly be blamed for the recent spate of vicious and paranoid right-wing attacks against him and his administration, but there are measures he can take to rally the public behind his presidency, to remind voters of the change they voted for last fall. He must respond with thunderbolts–a few bold strikes that blow away the naysayers and cheer his disappointed admirers.
Among the many opportunities for dramatic presidential action, we nominate the scandal of executive compensation–the spectacle of financial titans harvesting swollen personal fortunes from the great wreckage they themselves caused for the country. While attention is focused on healthcare reform, this other scandal is about to roll over the Obama presidency again–another round of bloated bonuses for top executives at the largest financial institutions, more outrageous than before. Have they no shame? Obviously not. The president should put aside friendly persuasion. By executive order, he can put a hard cap on their greed.
To understand the dimensions of what’s happening, check out the new survey from the Institute for Policy Studies, America’s Bailout Barons. It documents a correlation that most people already understand: the very institutions that collected the most in government assistance are converting their good fortune into personal rewards while the rest of the nation sinks deeper into the mire of unemployment, bankruptcy and loss of homes. Common sense tells citizens this is morally wrong. It is also bad for the economy.
Last year’s banking collapse brought about the deflation of Wall Street, ending a generation of metastasizing influence and profit for the leading banks and investment houses. Big banks failed or have merged with stronger survivors. Yet as the IPS study explains, the titans at the top have been raking in the bucks. The five highest-ranking executives at the twenty financial firms receiving the most public bailout dollars took home $3.2 billion from 2006 through 2008 (an average of $32 million per banker); their firms have laid off 160,000 people since January 2008.
Are you angry yet? This year, IPS warns, these mega-banks are on track to pump out even larger rewards to execs, even though some of these firms remain on government life support. Rewarding failure in this way guarantees that the greedheads will not abandon their reckless behavior.
President Obama can put a swift stop to these excesses–not in the name of vengeance but to create a better banking system. An executive order, for instance, could forbid any compensation at rescued institutions exceeding the $400,000 earned by the US president. Violators could be banished from enjoying any of the continuing subsidies provided by the Treasury and Federal Reserve.
Is this legal? If the bankers don’t think so, let them sue. Meanwhile, the president can demand immediate passage of legislation authorizing the cap. In February the Senate approved such a measure, sponsored by Claire McCaskill and Bernie Sanders, but it was dropped in conference. If Obama revived the legislation, people who are enraged that banks are making out like bandits while they lose jobs and homes would know the president is too. If Obama leads, they will rally to his side.