Left hand, meet the right hand
One hand is the Treasury Department. The other hand is Congress. The two hands don’t seem to be attached to the same body, but somehow, together they might still manage to strangle the program designed to buy toxic assets from the banks.
The story begins in today’s Washington Post:
Treasury Department lawyers have determined that firms participating in a $1 trillion program to relieve banks of toxic assets could be subject to limits on executive compensation, contradicting the Obama administration’s previous public position, according to a report to be released today by a federal watchdog agency.
Then, at a hearing this morning, Congressman John Sununu said several members of Congress were considering rules to compensation for those who participate. Sununu concluded that this would be another after-the-fact change that would keep companies from getting involved. He asked Treasury Secretary Tim Geithner about it:
“What is the administration and the Treasury Department’s position on
applying rules for compensation or other rules to the public private investment
GEITHNER: “We’re in the process now of completing the draft of a rule for
applying those conditions. We’re going to apply the law. We’re going to put out
in the public domain for comment a draft rule. That will give everyone the
chance — “
SUNUNU: “When will that be put out?”
GEITHNER: “Hopefully written in the next couple of weeks, relatively
SUNUNU: “What’s the Treasury’s position on application of the executive
compensation limits that are in law today to those partnerships?”
GEITHNER: “You’ll see in the rule how we propose to strike that balance. But
it’s my judgment that those compensation restrictions do not need to apply to
the programs that you referred to.”
No company is going to participate in this program if a. the rules aren’t made clear b. the rules keep changing or c. the rule is that if they buy in, the government can tell them how to pay their employees.
Their response will be — talk to the hand.
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