Washington, D.C. - After criticizing bailed out banks for not making loans to jump start the economy, Barack Obama announced another measure to issue tough love to the banks in order to keep them honest and responsible in their business dealings.
"Today I announce sweeping executive compensation for the leaders of the nation's bailed out companies. Instead of having them use tax payer money to award bonuses to the executive who got us into this mess in the first place, I will pay them in government IOU's issued on the very national debt they helped create," Obama said at the National Press Club.
Treasury Secretary Tim Geithner explained the plan to use government debt and make it the responsibility of businesses that expect a bailout.
"Rather than use direct taxpayer money to pay them, we'll give them their payment in government bonds that will pay back at a low interest rate. If they wish to be able to turn these bonds in and have them be worth something, they had better get their act together," Geithner said.
The nontransferable bonds, unlike regular Treasury Bills and Savings Bonds, come with heavy restrictions that make them based on performance. Under the terms of the bills, they can't be turned in for cash until the unemployment rate dips below 7% and a balanced budget emerges from Congress. This, Geithner believes, will encourage the biggest leaders in business to throw their support behind many plans the administration wants to push.
"Tax reforms that push a more progressive tax structure and close loopholes would favor these executives if they want to get their money," said Geithner.
Bailed out executives claim the restriction put on them by the government, which is the largest shareholder in most of the companies, are unfair.
"It violates the principles of the free market that the government as a shareholder can make demands upon us. The government should act like private investors and seek to maximize profit, not worry about the risk to other people's money," said banker Andy Brandeis.