The greatest risk in poor economic thinking comes from the unseen.

It is popular to condemn executive bonuses, so Obama wants to limit the bonuses to $500,000 at least initially reserved to those banks getting federal bailout funds. But are these egregious bonuses a serious problem throughout the banking industry or does it just seem that way because of the amount of coverage such abuses get?

But let’s suppose that there is a competent executive who has an established track record of turning around troubled banks, increasing back room processing efficiency, and has immense experience with creative ways of quickly recognizing and disposing of troubled assets.

Let’s say he is currently earning $2.5 million dollars a year. Will Obama’s restrictions make him seek a job in England without the restrictions?

How long will this talent drain happen before the U.S. is no longer a significant financial player in the world markets? The Sarbanes Oxley fiasco has already created a shift of financial power to London. The vast majority of the largest IPO’s already happen outside the US.

Will Obama’s restrictions create an opportunity for foreign owned banks to set up shop in the US without the current liabilities and hire away the best talent at a time when the American banking system needs it the most?

While the proposed restrictions refer to executives are other employees restricted as well? Will top performing salespeople and loan originators also be restricted?

The media is expected to stir up populist outrage because it makes them money, but we expect our leaders to exercise better judgment when making policy that can greatly impact our economy.

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