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Why the salary caps are only symbolic

By Allan Sloan
Last Updated: February 13, 2009: 6:32 AM ET

Here's why the caps on Wall Street compensation announced by President Obama and Treasury secretary Tim Geithner don't amount to much.

First, the $500,000 a year cap covers only cash payments. People subject to it could get untold millions worth of deferred stock and other goodies.

In addition, this cap would apply only to "senior executives" of firms that get extraordinary government help in the future, the kind of double- or triple-dip aid that Citi, Bank of America and American International Group have gotten. But this cap wouldn't apply to these firms unless they come back to the trough yet again.

Finally, if you read the Treasury's regulations describing the cap, you see that "senior executive" is never defined. How many people would have been subject to that cap had it been in place? How much of the $18 billion of bonuses that Obama denounced would have been affected? Treasury won't say.

A final note: the $18 billion number, from a January report by New York State comptroller Thomas DiNapoli, doesn't cover Wall Street in the broad financial sense. It covers only people who work at financial firms in New York State. It doesn't include places like BofA headquarters in Charlotte, N.C. But it sure makes for a nice, juicy statistic.

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