For what it’s worth, I never thought limiting executive pay was tremendously important component of the TARP (ultimately, it seemed mostly symbolic, and the need for a bailout was certainly not), but that doesn’t mean the Bush Administration didn’t completely snooker Congressional Democrats:
But at the last minute, the Bush administration insisted on a one-sentence change to the [limits to executive pay] provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.
Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives.
Say it ain’t so? Verily, as the Washington Post describes, “the modification reflects how the rapidly shifting nature of the crisis and the government’s response led to unexpected results.” Oh wait, as the Washington Post later reports in the same exact article:
Meanwhile, [Treasury Secretary] Paulson repeatedly told lawmakers that he did not plan to use bailout funds to inject capital directly into financial institutions. Privately, however, his staff was developing plans to do just that, Paulson acknowledged in an interview.
I’m not sure which is more stunning, the Washington Post’s willingness to just chalk it up to the “rapidly shifting nature of the crisis” while simultaneously reporting Paulson had no intention of using auctions, or the fact that the Bush Administration so capably hoodwinked Congress yet again.
As Steve Benen quips, “The relationship between Lucy and Charlie Brown keeps coming to mind.”