President Obama’s recent executive compensation plan comes on the heels of the revelation that Wall Street firms awarded over $18 billion in bonuses last year. The plan will create a $500,000 pay cap for executives at companies receiving substantial taxpayer bailout money.
While the Wall Street salary cap – certainly well intentioned – mirrors public sentiment nationwide, the Masters of the Universe and their friends are not so pleased. Some feel it is a “killer for New York.” Kathryn Wilde of the Partnership for New York argues the lower salaries on Wall Street will lead to a “critical brain drain” in the industry and “lower tax revenues for the city and state.”
But in the longer run, is this all bad? The so-called “brain drain” of high priced talent – the same folks who got us in trouble in the first place – could be fortuitous if more creative and innovative professionals now arrive on Wall Street. A new breed of Wall Streeter might have the potential to create a sustainable industry rather than the current casino culture. What may be a superficial wound on NYC in the short term may benefit the country as a whole – and even New York – in long run.