Limiting Banker Pay

I'm not sure what to think of Ken Feinberg's restrictions on executive pay at firms that received extraordinary help from the government.  On the one hand, like everyone else, I'm outraged at the sight of bankers paying themselves big bonuses out of profits made on the backs of bailouts and implicit guarantees that they can't "pay back".  On the other hand, this doesn't touch the current worst offenders, who have paid back their TARP funds.  Restricting bonuses only at the companies in which we now have a gigantic stake is emotionally satisfying, but bankers aren't just talking their book when they complain that talent is getting poached from bonus-limited firms.  I know it's fashionable to believe that traders are all a bunch of lucky, arrogant idiots, but there is some skill involved, and firms that lose their top people will probably underperform.

So how much am I willing to pay, in tax dollars, to make this well-deserved gesture?  Some.  But the recession has lowered the amount I'm willing to spend on gestures.

I suppose there's always the hope that this will encourage firms still in hock to the government to work as hard as possible to pay us all back.  But it's not a hope I'm awfully confident in.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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