Last month the U.S. Treasury Department gave vent to public outrage at the financial industry and ordered companies that were bailed out by government funds to reduce the basic salaries of their top 25 employees. The huge salaries and bonuses that are routine in the banking industry and on Wall Street are a ripe target at a time when the nation is still reeling from the near-collapse of the financial markets. The move by the Treasury Department was part of a larger effort by the Obama administration to regulate compensation throughout the financial industry, especially those pay schemes that encourage executives to take large financial risks for short-term gains.
Addressing compensation is largely symbolic, however. Though there is some satisfaction in cutting the financial titans down to size, populist outrage would be more fruitfully directed toward the work of regulating the banking and investment system to prevent another financial meltdown.