Say it ain't so. If this story is accurate, there is a lot of explaining to do. Obama has publicly supported limiting executive compensation for TARP recipients yet according to today's Washington Post, the administration is planning to circumvent Congress and relax these policies or push the money through other organizations in order to avoid restrictions. If anything, this sounds like yet another Larry Summers plan to help Wall Street but hopefully there's a mistake or something was misunderstood. If true, expect all hell to break loose, rightly so.
The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.If this turns out to be another Summers stunt it should be the end of his reign in Washington. Obama is going to have to start reaching out to economists that are not so closely tied to this economic crisis. This is serious mistake, if true, so we should be hearing some clarification about this story this week.
Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.
The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.
