WASHINGTON, September 18, 2009–The Wall Street Journal reports today that the Federal Reserve is about to propose new regulations that would give it power to control compensation policies at American banks–including banks that did not receive bailout funds. As the Journal notes, critics have long complained about high executive compensation packages, which have become increasingly unpopular in the wake of the financial crisis.
“It’s understandable that taxpayers think they should have some say in how bailed-out businesses are run, which is one reason why Washington should have never bailed-out those companies in the first place,” says Yaron Brook, president of the Ayn Rand Center. “But why have the critics been so intent on dictating to shareholders of private companies how much they can pay their CEOs ?”
In fact, said Brook, “The critics want to bring down banker’s pay, not because it is economically unjustifiable, but because they view it as morally unjustifiable.”
But, says Brook, “successful CEOs earn their pay by creating vast amounts of wealth. In smearing America’s great wealth creators as villains and attributing their high pay to greed and corruption rather than productive achievement, the critics want us to overlook the virtues that make individuals successful. In demanding lower compensation, despite the wishes of shareholders, the critics aim to deprive them of their just desserts.
“Ultimately, how to pay bankers is a question that only shareholders have a right to decide. But in today’s anti-business climate, it’s vital that we recognize the moral right of successful individuals to huge rewards.”