Treasury Lawyers Overrule Geithner, PPIP Players Subject To Pay Caps

Oops.  It seems Geithner has blown it again.  If the Treasury lawyers are right, the PPIP is now officially doomed.  (And good riddance):

Amit Paley, 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.

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.

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