Is It All Show?

The news that President Obama wants to put a cap on the salaries of executives who receive TARP money has put the exec's in a tither.

But Robert Reich thinks this proposed $500,000 limit on executive pay, is just for show.

The $500,000 seems little more than a symbolic gesture designed to reassure the public that the large amounts about to be asked for in the next stage of bank bailout -- likely far more than the $350 billion remaining in "TARP" (more on this in a moment) -- will not simply feather the nests of those who created the mess in the first place.

The guidelines don't actually put a cap on total pay but only on salaries (usually a small portion of total pay), and even then apply only to firms receiving "exceptional assistance" -- presumably especially large bailouts in the tens of billions of dollar range, such as went to Citigroup and AIG -- rather than to those receiving run-of-the-mill bailouts amounting to, say, under ten billion. Most firms getting bailouts may continue to pay their executives whatever they want to pay them as long as they disclose it to their shareholders and give shareholders an opportunity to express their views about it.

So why is Wall Street so upset about the faux $500,000 limit? Precisely because of its symbolism.