Senate Can Claw Back Any 2008 TARP Bonus Over $100,000!


The bill hasn’t been written into law yet, but the Senate wants the power to claw back any 2008 bonus of any TARP bank that was more than $100,000.

Kenneth Landon, JP Morgan, analyses provisions tucked into the draft of the bill:

* The Senate bill provides for a “claw-back” of “excessive” bonuses paid
to employees for work done during 2008 (i.e., the most recent payment of
bonuses).  The bill defines “excessive” bonus as any amount paid above
$100,000, not including stock awards.  
When “excessive” bonuses are
determined to have been paid, the US Treasury is authorised to seek
“reimbursement” from both the TARP bank *and* the individual employee.


Here is the relevant section:
Sec 6006 (pages 739-40)
IN GENERAL.-The Secretary shall review bonuses, retention awards, and
other compensation paid to employees of each entity receiving TARP
assistance before the date of enactment of this Act to determine whether
any such payments were excessive, inconsistent with the purposes of this
Act or the TARP, or otherwise contrary to the public interest.

NEGOTIATIONS FOR REIMBURSEMENT.-If the Secretary makes a determination
described in subsection (a),  the Secretary shall seek to negotiate with
the TARP recipient and the subject employee for appropriate
reimbursements to the Federal Government with respect to compensation or bonuses…

IN GENERAL.-The term ”excessive bonus” means the portion of the
applicable bonus payments made to a covered individual in excess of