The Obama administration's proposal to cap executive pay at banks receiving federal bailout money at $500,000 has sparked an ongoing debate in the pages of the Financial Times.
In response to the claim that high pay is necessary for the banking sector to attract the "best and brightest," one letter writer makes the obvious point that "money may not attract the “best” but merely the greediest... Is there any evidence that the multi-million dollar bonuses paid out in the past years succeeded in attracting the “best”?"
Another letter-writer suggests paying bankers in toxic assets.
John Kay's column on the subject today makes the point that a $500,000 cap on bankers' pay is effectively a reintroduction of the Glass-Steagal act, separating investment from retail banking. He goes on to say, "others claim that a basically sound structure of wholesale finance was upset by rogue mortgage brokers in America’s inner cities and the public’s love affair with housing and credit cards. Those who hold this view think it is important to keep top executives and traders in their posts. Only by doing so can failed banks be restored to their healthy state and weaned from dependence on the public purse.
"The latter view was expressed last week by Deutsche Bank’s Josef Ackermann, who explained that it was necessary to pay the going rate for talent even as his bank reported substantial losses. But German shareholders, taxpayers and depositors might take the alternative position. They might want such talent to be kept well away from their savings."
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