It is worth recalling that Congress during the first Clinton administration passed legislation limiting cash compensation for CEO’s of public companies to $1 million. The result was that compensation swung to stock options. This in turn encouraged CEO’s to borrow in order to buy in company stock, which helped stoke the subsequent stock market bubble. When the accounting profession then sought to rein in the use of options, which at the time did not have to be treated as corporate expenses, several congressmen and senators, Joe Liberman in particular, publicly threatened them with legislation that would take away their authority over options.
The actions of the Fed were far more important in creating the stock market bubble that subsequently popped in 2000, but Congress certainly made it worse with its unwise legislative interference with executive compensation. This was just one more example of government fixing, manipulating, or nudging prices that should be set by the market, that is, by consumers.
