$500,000 Executive Pay Cap: Reform or Political Gimmick?

"If you're an executive working there, your compensation is now limited to half a million dollars a year plus restricted stock and if your market value is higher, then you may choose to leave that institution," Talbott said. "If you are an institution that is looking for outside assistance and can only pay them half a million dollars plus restricted stock and the value of that employee that you are seeking, that potential hire is higher, then it would be difficult to attract them."

Talbott said that the pay scale for Wall Street "is different for the pay scale for America and so these numbers look large" but there is a "market value for these executives."

"There's a very small talent pool of individuals that have the education, experience and knowledge to operate a global, international services firm in this day and age," he said.

Talbott added that "these restrictions could have a chilling effect on participation in" the next round of government bailouts.

ABC News' Dean Norland, Mark Mooney, Matt Jaffe and Eileen Murphy contributed to this report.

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