Fear of public shame and bad PR will prevent many banking executives from taking big (or any) bonuses this year. But if there were any notion that the TARP could curb pay, think again.
The Washington Post: “…(A)t the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.”
And since the Treasury decided against buying troubled assets, then, well that limit just doesn’t apply. Even Citigroup (C) didn’t sell their troubled assets to the government — they just got the government to backstop losses on those assets.
This stuff is pure red meat for the Gretchen Morgenson’s of the world, and everyone else who is convinced that the TARP has just gone to line the pockets of bankers. Now it’s even easier to argue that Paulson’s change of heart, coming right after a last-minute change by the Bush administration was by design. We’re not saying it was, necessarily, just that it can easily be framed that way.