The Obama administration is imposing restrictive rules on fat paychecks and lavish spending for the executives of companies who receive funding from the government. The move is an expression of the President’s and the country’s outrage at the fact that almost $20 billion were spend on bonuses for Wall Street execs last year despite the financial crisis which was caused by them in the first place.

Under the new rules to be implemented by the Obama administration, the pay of executives of struggling companies that get taxpayer bailout money – such as Citigroup Inc. and American International Group Inc. - will be limited to $500,000 in annual salary. The President urged corporate boards to adopt new policies on luxury expenditures such as lavish entertainment and parties. The companies will probably compensate executives using stock, but that couldn’t be sold until the company repays the bailout money to the U.S. Government.

The rules Obama announced only apply to the firms that will receive bailout money from now on, not to companies who already benefited from government funds. 

"This is America, we don't disparage wealth,” said Obama, who promised that, next week, more measures would be established in order to help the financial sector recover from what is thought to be the deepest crisis since the Depression in the 1930s.

Obama re-underlined the fact that people are upset that executives are rewarded for failure and what makes it more frustrating is that the money for the bonuses came from the U.S. taxpayer’s pocket this time.

Obama was backed in Washington and even some Republicans who were critical of him, praised him for this move.

“I will not tolerate it as president," said Obama about the “bad strategy” of the CEO’s who award themselves fat compensations packages.

After Obama announced the new caps on executive payments, many analysts said the Wall Street folks will most likely find their way around them through different loopholes.

However, the executive payment caps still leave Wall Street executives plenty of room to wiggle. The new rules will apply to a few executive, but the star traders, brokers and salespeople who are earning fat pay packages will continue to do so.

"I suspect this doesn't impact them at all," said Mark Borges, a principal at compensation consulting firm Compensia Inc., The Associated Press reported.

The rules are practically pitting a group of government bureaucrats against consultants and lawyers who are paid fat checks and are very smart to, said Graef Crystal, a former executive compensation consultant, for the Los Angeles Times.

"It's a lot easier to find ways around things like this than it is to invent them in the first place," Mr. Crystal said.

Banks that will want to avoid the bailout money which imply the $500,000 cap will provide full public disclosure and hold a nonbinding shareholder vote.