Chicago considers limits on banker pay for banks doing municipal deals
From Reuters:
CHICAGO, Oct 8 (Reuters) - Bankers wanting to do business with the city of Chicago would have to severely limit pay packages for top executives whose companies are participating in a federal bailout, under a proposed ordinance introduced in the City Council on Wednesday.
Under the proposal, annual executive compensation, including bonuses, would have to be capped at $400,000 in order for Chicago to tap a financial institution to serve as a bond underwriter or municipal depository.
"In short, the city of Chicago is not going to roll out the welcome mat for any financial institution that accepts money from this unprecedented federal bailout, yet turns around and hands out huge amounts of money to its executives," Alderman Edward Burke, one of the ordinance's sponsors, said in a statement.
The proposal would cover any financial institution and its affiliates whose troubled assets are purchased by the U.S. government as part of the recently passed $700 billion financial bailout plan.
The measure would also prohibit the city treasurer from purchasing securities issued by institutions that do not adhere to the cap.
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Talk about shooting yourself
Talk about shooting yourself in the foot.
*applause While it may stall
*applause
While it may stall some Benjamins going into Chicago, that's quite the step for a major city in the US. We'll see if it sets a precedent for similar moves...
The writing is on the wall
Get used to seeing policy like this. It is only the beginning. The halcyon days of eight-figure bonuses are behind us.
The interesting thing about a policy like this is that it is intended to "punish" the banks that take part in the bailout. In fact, it will drive the market because banks that don't take part in the bailout and aren't subject to this legislation will no longer be able to compete with the lower fees of the bailout banks. When you look at it that way (if this catches on with other cities), the municipalities will look pretty smart.