The giant stimulus package that cleared Congress Friday includes a last-minute addition that restricts bonuses for top earners at firms receiving federal cash -- including those that already received it -- more severely than the Obama administration's previous pay limits.I know what you're thinking, but keep reading.
The most stringent pay restriction bars any company receiving funds from paying top earners bonuses equal to more than one-third of their total annual compensation. That could severely crimp pay packages at big banks, where top officials commonly get relatively modest salaries but often huge bonuses.
As word spread Friday about the new and retroactive limit -- inserted by Democratic Sen. Christopher Dodd of Connecticut -- so did consternation on Wall Street and in the Obama administration, which opposed it.
The administration is concerned the rules will prompt a wave of banks to return the government's money and forgo future assistance, undermining the aid program's effectiveness. (Emphasis added)And wait, there's more:
In speaking to Mr. Dodd, Messrs. Geithner and Summers also expressed concern over another provision he inserted that lets banks and other aid recipients pay back aid more easily. It says banks would no longer have to raise new private capital to replace the government's funds in order to repay it.Hallelujah! We have found our deliverer, and it is Chris Dodd, the esteemed Senator from the great state of Connecticut (see picture below). With any luck, the healthy banks will bail on the bailout, and the unhealthy firms like Citigroup and Morgan Stanley will be left to wither and die as it always should have been. I have no idea why Dodd added the clause to the stimulus package making it easier for banks to give back the capital. I think it may be that he simply is an idiot. Regardless, that little caveat has turned what would otherwise be an egregious infringement on individual rights and all-around insult to everything good about humanity into an escape hatch for healthy banks suffocating to death in the smothering embrace of the Treasury Department's enormous meddlesome bosom.
(Here we see Chris Dodd during his audience with Her Majesty, the Queen of England)
In other stimulus news, Governor Mark Sanford of South Carolina seems to be the only sensible governor out there. He spent months fighting the stimulus bill, and may now reject any of its funds for his state. He's a favorite to run for president in a few years. That's one to watch out for. He'll probably disappoint, but it doesn't hurt to hope. Thanks to Steve for the link to Sanford's article on CNN.com.