Not exactly the epitome of strong leadership.
The President, who’s own Treasury Secretary demanded that retroactive bonus limitations not be placed in the stimulus, now hopes the bonus tax bill will be “softened” before it reaches his desk.
What’s softened mean? Evidently, The White House is pretty concerned about the effect the plan could have on the TALF, the plan to help hedge funds and other parties take on leverage so as to buy distressed assets. The fear is that given the backlash against big profits, the hedge funds taking a risk will see their profits confiscated ex-post facto.
And we think this is a pretty legitimate concern.
Picture it: John Paulson makes $500 million buying distressed assets, after only putting up $10 million of his own cash, while the government puts in $90 million. The bet works out. Some newspaper reporter explains what happened, and next thing you know, Barney Frank is talking about how those are the “people’s profits” and how this is no time for hedge funds to feasting off our carcases — even though that’s the exact point of the TALF.
This seems more likely than not, to us.