Monday, April 6, 2009

Not a Good Look

Administration Seeks an Out On Bailout Rules for Firms
Officials Worry Constraints Set by Congress Deter Participation
Saturday, April 4, 2009; A01

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.

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 program set up a special entity providing low-cost loans to hedge funds and other private investors so they can buy securities that finance consumer debt from banks and other lenders. This would free these companies to make more loans.

When the Bush administration announced the program in November, officials directed the Fed to apply the pay limits to the lenders because they stood to benefit the most from the program. "There was a public hunger for executive-compensation restrictions, and we knew we couldn't be tone-deaf to the politics there," a former Bush administration official said.

In February, Obama administration officials at the White House and the Treasury began reviewing that decision. Treasury officials consulted with Department of Justice attorneys, who said they could legally avoid the pay restrictions, according to a government official. The requirements were removed just before the initiative was launched.

Not what you like to see on the front page of the Washington Post.

Barack said in his meeting with the Bankers that "the anger is real", and I wish more people in the administration factored that in to their decision making. Crappy political implications that come along when you make extremely crappy policy, and usually for good reason. There is major public outrage over this stuff, and being seen as defending the Banks is isn't where you want to be in the long or short run.

And all of this is because Larry Summers and Tim Geithner believe the bankers when they say that only the people who destroyed the banks are capable of fixing them. Someone hire Isiah to rebuild the Knicks!

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