The government thinks it ought to micromanage the compensation of firms getting government money. Here’s links to my previous thoughts on these pay restrictions.
Of course a big problem with these restrictions is that they defeat the purpose of the bailouts by discouraging financial institutions from taking or keeping the money the government thinks they need to boost the recovery. So the banks are rushing to repay.
How to solve that? Of course: regulate non-recipients too. Here’s today’s NYT on these plans.
“This is the government trying to tell the TARP banks not to worry, because everyone else’s compensation will be monitored, too,” Gustavo Dolfino, president of the WhiteRock Group, a financial recruiter, said of the industrywide principles. “We’re in a world of TARP and non-TARP.”
The endgame, I fear, is to use the financial crisis as an excuse to put into effect all of those wacky and ill-supported ideas about pay that have been kicking around for years.
Remember the good old days when it was supposedly just all about disclosure?
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