Is TARP Pay Cap Just A PR Scam?

ABC says the TARP pay cap comes with one exception - stock payments. And news items are headlining AIG, BOA and Citiroup. But Forbes offers this. I was wondering about retroactive application. It isn't there. So only companies that come begging in the future and then only those in need of "exceptional assistance" need comply. Seems like this might not impact too many of his prospective big donors for 2012 after all.

But the administration's response, with its populist appeal, seems to hedge against putting too many restrictions on firms that receive TARP money. The reason: It puts limits in place for just a few firms that find themselves in the most dire financial straits.

The restrictions on executive compensation would not apply retroactively but would apply to any future TARP programs.

Comments

[mark l.]

http://people.forbes.com/profile/robert-rubin/19713

here's a peek at robert rubin.

If anyone wonders why the most expensive govt bailout ever, does not merit a senate hearing with those involved, ask the democratic friends of rubin.

[expat]

I just heard a business reporter on BBC World echo the Forbes skepticism. Perhaps some in Europe will start to catch on to Mr. Promise Them Anything.

[Ted]

While it should go without saying that even a legitimate President's "ordered" $500,000 pay cap is an unenforceable intrusion into the private sector, as if that weren't enough, Obama LACKS EVEN OSTENSIBLE AUTHORITY to issue the order UNTIL HE OVERCOMES "RES IPSA LOQUITUR" BY SUPPLYING HIS LONG FORM BIRTH CERTIFICATE AND PROVING HIS ELIGIBILITY TO BE PRESIDENT UNDER ARTICLE 2 OF THE US CONSTITUTION.

[old trooper]

Nope. TARP is rape, robbery and pillaging of your Great Grandchildren s tax bills.

[Todd]

Here is the pertinent excerpt from the article:

"This new limit comes with one exception: Additional compensation can be allocated in restricted stock that will not vest until taxpayers have been paid back -- the contractual dividends plus interest -- or after specified period according to conditions that consider the degree a company has satisfied its repayment obligations as well as lending and stability goals,among other factors."

This is not a P.R. scam. This is perfectly logical and encourages executive compensation based upon long run success. The $500,000 cap is definitely the near term cap on compensation, but if executives run their corporations well then down the road they have the opportunity be amply rewarded as their stocks rise in commensurate value with the success of their companies.

Just what exactly is wrong with that?