Read the fine print and you’ll see it’s not quite that simple. The cap only applies to companies that need “exceptional” assistance from TARP and contains an exception for stock options, provided they vest after taxpayers are fully repaid. (Non-exceptional TARP recipients can pay execs whatever they like so long as they disclose the amount.) Still, it’s a populist masterstroke, perfectly timed to bump Daschlepalooza and the cratering polls on the stimulus off the front page. Watch Geithner at the beginning, then skip ahead to 6:15 or so for the meat of Obama’s statement. The question is, will the money saved by limiting compensation exceed the value lost when talented managers decide they’d rather work somewhere else for seven figures? I’m guessing yes, since (a) gainful employment’s hard enough to come by right now that managers might not be as picky as we expect; (b) steering a TARP company back onto its feet will be a sufficiently impressive credential as to guarantee big paydays in the future for any manager who can do it; and (c) if — if — it’s true that government bailouts are the only thing right now standing between the financial system and collapse, then gestures like this aimed at shoring up public support for those bailouts are worth far more than the immediate savings in compensation. If it’s not true, well, then, sky’s the limit!