One comment I've seen in a variety of forms here is that the same senior banking executives who presided over the current mess will simply take TARP money in the form of bonuses and golden parachutes.
Would it surprise you to learn that that's against the law?
For the most senior executives in any bank that receives assistance from TARP, that's the case, courtesy of Section 111(c) of the Emergency Economic Stabilization Act of 2008.
Here's guidance from the Treasury on executive compensation:
Section 111(b)(2) of EESA provides for the executive compensation and corporate governance standards to include: (a) limits on compensation that exclude incentives for senior executive officers (SEOs) of financial institutions to take unnecessary and excessive risks that threaten the value of thefinancial institution; (b) required recovery of any bonus or incentive compensation paid to a SEO based on statements of earnings, gains, or other criteria that are later proven tobe materially inaccurate; (c) prohibition on the financial institution from making anygolden parachute payment to any SEO during the period that the Treasury holds an equity or debt position; and (d) agreement to limit a claim to a federal income tax deduction for certain executive remuneration. The provisions apply while the Treasury holds an equity or debt position in the financial institution.
And here's a translation, by me. The CEO, the Chief Financial Officer and the three most-highly compensated executives after them may not receive bonuses for risk-taking; must pay back bonuses received if they were based on material misstatements of earnings; may not receive a golden parachute. In addition, the bank will not take a tax deduction for executive income in excess of $500,000, something current tax law allows.
Treasury also issued a press release last week with interim rules that requires CEOs of these institutions to certify annually that they are in compliance with the executive pay requirements.