So the House of Representatives approved legislation granting the US Treasury broad powers to stop “unreasonable and excessive” compensation at financial firms that receive government bailout funds. It’s thought that this will replace earlier efforts to impose a steep tax on bonuses.
The bill is called the Pay for Performance Act. It passed on a 247-171 vote. Although it says the Treasury should only ban bonuses not based on performance standards, there are few practical limits on the Treasury’s power here. When all this is over, historians will someday marvel at the huge amount of power transferred to the Treasury Department.