Treasury: Yes, exec-pay limits apply to toxic-asset program
posted at 3:15 pm on April 21, 2009 by Ed Morrissey
Tim Geithner told Congress today that his new program for a private-public partnership on toxic assets has run into difficulties in providing valuation for what Geithner calls “legacy assets,” the latest euphemism from the Obama administration. That shouldn’t surprise anyone, since Geithner and Obama have difficulty understanding the risks their partners run in participating in the program at all. Despite their initial insistence that the caps on executive pay from the TARP program would not apply to the toxic-asset partners, Geithner’s own department reached a much different conclusion:
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.
The disclosure comes amid a congressional investigation into whether the administration is abiding by a law limiting lavish pay for executives at firms that have benefited from the $700 billion bailout for the financial system.
Speaking last month about the initiative to buy toxic assets, Treasury Secretary Timothy F. Geithner said, “The comp conditions will not apply to the asset managers and investors in the program.”
But Treasury lawyers have told the special inspector general for the federal bailout that executives involved with that initiative and another $1 trillion consumer lending program “could be subject to the executive compensation restrictions,” according to the report from Special Inspector General Neil M. Barofsky.
Small wonder they’re having problems valuing the assets. While Congress insists on interfering with executive compensation, few if any people will want to take on the risk of purchasing the assets. Not only will they most likely lose some money in the trades, the executives will have to forego their compensation. Why bother taking on risk under those circumstances?
More problematic has been the fumbling on this issue by Geithner and Obama. This issue should have been resolved at the time Geithner rolled out the program. Now it looks as though private-sector investors can’t trust the Treasury to know its own laws and regulations, not exactly a confidence builder for the holders of capital Geithner needs for this program.
Remind me again about how exactly Geithner was “uniquely qualified” to run Treasury. It’s the Gang That Couldn’t Read Straight.
Blowback
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The command economy rolls on.
lorien1973 on April 21, 2009 at 3:18 PM
You expect a guy that says the laws don’t apply to him to be able to properly establish and enforce laws?
Ha…
Skywise on April 21, 2009 at 3:20 PM
Someone should remind the Mr. Obama and Turbo that the last time the government tried to set compensation restrictions on the private sector(Roosevelt’s National Recovery Act NRA) that the supreme court declared this unconstiutional.Funny thing is the company that fought him tooth and nail against this collectivism was FORD!
sargentj on April 21, 2009 at 3:24 PM
Obama (licks finger and sticks it in air) “As I have always said, and let me make this perfectly clear….”
cs89 on April 21, 2009 at 3:25 PM
Fox guarding the Hen house. Why are the hens so scared?
portlandon on April 21, 2009 at 3:26 PM
This is the wrong business the government is in.
Kini on April 21, 2009 at 3:26 PM
The degree of incompetence in this administration is staggering! To think it’ll be nearly four years before the grown-ups can take over again. How much more damage are they going to cause, based on the total clusterfark the first 100 days have been!
stonemeister on April 21, 2009 at 3:26 PM
Kini on April 21, 2009 at 3:27 PM
Not a surprise, this admin has been a disaster.
rob verdi on April 21, 2009 at 3:29 PM
+
the_nile on April 21, 2009 at 3:29 PM
My micro professor in b-school would always say, “If you only remember one thing from this class, remember ‘incentives change behavior’”. It would be nice if any member of the Obama administration understood this.
JamesB on April 21, 2009 at 3:30 PM
Geithner has also determined that everyone that works is in partnership with government. Geithner cited the fact that federal government allows you to keep about 70% of earnings. Given this generosity, the government can set your salary.
WashJeff on April 21, 2009 at 3:30 PM
Collapsing under the weight of its own incompetence.
spmat on April 21, 2009 at 3:30 PM
Restricting pay for the very top execs at bailed out banks makes some sense.
However, in the case of GS or JPM the government forced them to take the TARP money and is now trying to force executive compensation on them as a result. It lends a new level of fear to the phrase “We are from the government and we’re here to help”.
dedalus on April 21, 2009 at 3:35 PM
Well, he’s the only former Fed Reserve Bank President to be completly clueless on finance and tax laws.
Rocks on April 21, 2009 at 3:36 PM
I bet if we go back and listen to Dear Leader’s speech again, with the aid of high tech audio equipment we’ll be able to hear that He actually said “uniquely unqualified”.
rbj on April 21, 2009 at 3:37 PM
Like a blind captain in uncharted waters…blindlessly zig zagging, just to look like they are avoiding something.
right2bright on April 21, 2009 at 3:43 PM
I believe my comments were already posted by others, but the Socialization of Amerika continues apace.
steveegg on April 21, 2009 at 3:44 PM
Other than Pelosi, Geithner is now by far one of the most “out of control” people in the world. And sueing our government for redress will take years to reach the Supremes. All this while health care, energy, and free education are still on their frickken table—all in the hidden name of wealth distribution.
Rovin on April 21, 2009 at 3:44 PM
good lord, just what are they thinking in Central Planning?
Onager on April 21, 2009 at 3:45 PM
Or incontinence.
MDWNJ on April 21, 2009 at 3:45 PM
Nothing to see here, move along.
At the end of 4 years of this Maoist amateur’s administration, the only people still having a positive bank balance will be the crooks in Congress.
SeniorD on April 21, 2009 at 3:47 PM
No honor among partners in generation spanning grand larceny trying to divide up the ill-gotten gains from their royal scroomage heisting of Americans anymore? What is this country coming to I ask you?
MB4 on April 21, 2009 at 3:47 PM
Redo at day one.
the_nile on April 21, 2009 at 3:53 PM
“I am altering the deal” Tim “Turbo Tax” Giethner
It’d be nice if Beck did a rant on how the banks want to give us back our money and the government would rather have total control. See if he can make that guy faint again.
They think they’ve got a winner in bashing bank CEOs. They figure no one will care about greedy bankers.
Iblis on April 21, 2009 at 3:55 PM
Treasury Secretary Timothy Geithner, unlike Henry Paulson, doesn’t hail from Wall Street, but he’s one more example of how titans of government swiftly come to sympathize with titans of finance. They slip in and out of each other’s worlds, promote each other to the top, and mystify their work to convince the uninitiated that no one else can do it.
They easily have their way with compromised regulators ready to look the other way as a small sliver of the population plays high-risk poker with other people’s money. This sliver then has its way again unwinding the damage caused. Huge sums are pocketed on both ends.
- Margaret Carlson
If Dwight Eisenhower was still alive today I think he would no longer be warning of the Military / Industrial complex, but rather would be warning, and for some years now, of the Titan Crooks of Government / Titan Crooks of Finance complex.
MB4 on April 21, 2009 at 3:58 PM
Geithner and Obama = Fumble and Bumble. Call in Barney Fwank.
If the private sector knows what’s good for it (and us too), it will go Galt… and left this Mussolini power grab come apart at the seams.
petefrt on April 21, 2009 at 3:58 PM
leftletpetefrt on April 21, 2009 at 3:59 PM
What a snake in the grass. >>:(
mindhacker on April 21, 2009 at 4:14 PM
You forgot Morgan Stanley. They were forced to take the money, too.
pullingmyhairout on April 21, 2009 at 4:14 PM
Did you really need an answer to that?
steveegg on April 21, 2009 at 4:25 PM
All thats’ missing from our current federal leadership is the deployment of armed forces to enforce the dictates of the office.
How long will it be before the US Marshalls are ordered to arrest bankers and/or executives who refuse to take Federal money, who wish to pay back federal money foisted upon them, or who, in the case of Ford Motor Company, give’em the bird?
Can you see it coming? If you haven’t noticed, the justice department is investigating numerous “potential fraud” cases. Surely, some weasel thought he could pocket a load of cash and no one would notice, but I suspect there’s a lot more behind these “investigations” than meets the eye.
BobMbx on April 21, 2009 at 4:30 PM
Yes. Good point. John Mack is a sharp guy.
dedalus on April 21, 2009 at 4:30 PM
Yep, he’s worse… he hails from the World Bank / IMF/ Fed Res Bank set….
Romeo13 on April 21, 2009 at 4:56 PM
I just loved it when Geithner said “I’m not a banker or an investment banker. I’ve never worked in the private sector.” when one Congressman said, “I’m a lawyer, you’re a banker.” So, he admitted, as he tries to run private companies, that he’s never worked at one . . .
FAIL
PastorJon on April 21, 2009 at 5:07 PM
Disincentives also change behavior.
Dhuka on April 21, 2009 at 5:49 PM
Barney Frank, my super awesome Congressional Representative and poster boy for term limits, was in town for the 4th annual “Breakfast With Barney.”
My father had to stop by and make a quick appearance for local gov’t purposes and had the misfortune of getting trapped at a front table and forced to stay for the speech.
Since he was there anyhow he took advantage of the opportunity to ask Barney a couple of questions, one of which was if he supported the rejection of TARP recipients’ requests to repay their loans.
Of course he did, and he provided a very detailed explanation of his reasons for doing so. So detailed that he actually commented that Pelosi and Reid weren’t going to be very happy with him when he went back to D.C.
Besides the whole bank regulation aspect and sending a bad message that might discourage other banks from participating in TARP, he stated that the massive amount of interest that the government would collect on those loans was essential for the funding of Obama’s social engineering projects.
Not to pay back the taxpayers or reduce the massive deficit. No, he (and congress) want more money to spend.
Grrr.
(Dad’s mission was successful – many important people were duly impressed that Barney knew him well enough to address not just by name, but by nickname. Sure surprised me, too, considering the fact that they do not share many political beliefs.)
racecar05 on April 21, 2009 at 6:40 PM
Hell, why should they bother. Timmy didn’t even FOLLOW the tax laws prior to getting the head job. And neither did several other cabinet members.
GarandFan on April 21, 2009 at 7:37 PM
Just watch… if the banks hold out for a few more weeks the Treasury will give them the dam toxic assets. For free. Free toxic assets… come and get ‘em boyz.
Griz on April 21, 2009 at 10:00 PM
We have a toxic Treasury
They even want to contaminate healthcare out of the treasury.
seven on April 22, 2009 at 1:43 PM