Finally, a decent idea out of Treasury. The banks have been doing their best to game the system and pay back TARP money to avoid the compensation restrictions. Treasury is now going to link the billions in FDIC debt guarantees as well. Until the banks pay back everything, they're stuck with the compensation limits. This seems fair and it's worth noting the significant change to the banking bailout plan. Maybe this is a sign of things to come.
Banks that want to pay back their federal bailout funds and free themselves from government restrictions on compensation and dividends will have to sever their ties to another financial assistance program.
Financial firms eager to return infusions from the $700 billion Troubled Asset Relief Program will have to demonstrate that they can operate without debt guarantees provided by the Federal Deposit Insurance Corp., a senior government official said Tuesday. The FDIC program allows financial institutions to borrow money at lower costs.
