No, The Money Must Be Free
Not only does it look like the Obama Administration is going to throw more money down the bottomless pit created by the financial industry, they are not going to push too hard to restrict compensation, despite all the bluster. Because, you see, Wall Street executives have a veto power over the policy.
The Obama administration has finished drafting the central elements of its plan to rescue the financial markets and is gathering feedback from regulators and Wall Street executives, sources familiar with the matter said yesterday.
While some details need to be hammered out, the strategy is likely to be laid out publicly in about a week, the sources said.
In finalizing the plan, officials have made a policy decision that could dismay lawmakers. The administration is likely to refrain from imposing tougher restrictions on executive compensation at most firms receiving government aid but instead retain looser requirements initially included in the Treasury's $700 billion rescue program, a source familiar with the deliberations said. Officials are concerned that harsh limits could discourage some firms from asking for aid.
Yes, the real problem is that the bankers won't take the handout if they're not allowed to keep their luxury yachts. They'll put aside the fact that they'll be out of business without public assistance.
Setting up a new Resolution Trust Corporation when the banks are fundamentally insolvent is one thing. It's apparently beyond the realm of conception that the government seize the banks and take them over so taxpayers are actually safeguarded and shareholders and creditors are cut out of the deal. I'm not happy about it, and we'll be paying through the nose so that shareholders and their management will be made whole, but fine. But when you actually make the argument that we can't stop the Wall Street gravy train because then the banks won't participate in the receipt of hundreds of billions of dollars, you're telling us that they're holding a gun to our heads. And that's just not going to work. You want a bailout, we can do that, but you're going to have to take some concessions in the process. Claire McCaskill's bill on capping compensation for those who receive TARP money would be a good start. Voting shares for the government would be much better.
Or maybe, just maybe, we give all that money to the homeowners and debt holders to give to the banks, so the people get debt relief out of the deal and the banks get value for their toxic waste.
But that's COMPLETELY out of the question.