Loophole in TARP on Executive Pay

The financial bailout that Hank Paulson got through Congress was supposed to limit executive pay.  Unsurprisingly, there is a loophole in the law which may make that part toothless.

A Washington Post article on this from today:

Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives, so lawmakers included a mechanism for reviewing executive compensation and penalizing firms that break the rules.

But at the last minute, the Bush administration insisted on a one-sentence change to the 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 Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives.

“The flimsy executive-compensation restrictions in the original bill are now all but gone,” said Sen. Charles E. Grassley (Iowa), ranking Republican on of the Senate Finance Committee.

Somehow, I am not surprised.  I knew that somehow Bush and Paulson wouldn’t let their cronies down.  It is ridiculous and immoral to give these banks and financial companies taxpayer money — to free up credit markets that still have not freed up — and then allow those executives who were at least partly responsible for creating the financial mess to reap huge salaries and bonuses.

The Bush administration has been incompetent at best and willfully malfeasant at worst.  For my money — and it is my money, as a taxpayer — it’s willful malfeasance.  Bush has defied common sense — and the straight face test — repeatedly over the course of the last eight years. 

• In Iraq, Bush ordered this country to war while having a terrible strategy behind the tactics simply because he didn’t like Saddam Hussein.  To get the nation behind him, he lied about Saddam having weapons of mass destruction.  More than 4,200 Americans have been killed in Iraq because of Bush’s lies.
• In Afghanistan — the justified war — Bush shifted badly needed resources to Iraq, let bin Laden escape at Tora Bora, and now the Taliban is resurgent.
• There have been two recessions under Bush’s watch — the first probably cause by September 11, but the second in part was because of massive bubbles — credit, housing markets — that were allowed to inflate.
• The United States now tortures its enemies, which flies in the face of what America is supposed to stand for.  It quasi-legally imprisons those enemies offshore, away from the reach of the court system — denying those prisoners any habeas corpus relief — and then sets up sham tribunals to try them.
• The Bush administration allowed the abuses at Abu Ghraib prison in Iraq and set up secret prisons in Eastern Europe to house and interrogate terrorism suspects. 

That, of course, is only a partial list.  I could go on and on and on.  Of course, he had a complicit Congress for the first six years of his administration.  The American people, it seems, woke up too late.

This post wasn’t intended to be a list of all of Bush’s failures and deliberate, disastrous choices; it just ended up that way.  I’m disgusted by Bush and his policies.  The bottom line is this: Bush has been a catastrophe from Day One.  And he’s still in office causing harm.  He fully deserved the insult from the Iraqi reporter this weekend.  He deserves impeachment in the House and conviction in the Senate.  I sincerely hope that the Obama Justice Department will investigate Bush’s administration — not with the plan of prosecutions — but to bring these messes fully into the sunlight so the healing can truly happen.

Obama’s Iraq Speech

Barack Obama is 100 percent correct when he says that the interests of the United States have been hurt more than helped by our adventure in Iraq.  Afghanistan — where the real threat was and where there was strong worldwide support for invading — has been shunted aside to press a war in Iraq that was (as I’ve said before) ill advised, as well as poorly planned and executed.  Meantime, Osama bin Laden is still at large, uncaptured.  The Taliban is regrouping and is launching military offensives in Afghanistan.  It’s another job half done by the Bush Administration.

As Obama pointed out today, the surge has produced some short term success in Iraq.  But it’s come at the cost of further stretching an already overstretched military and adding more national debt for our children to pay off.  Obama has pledged to end this war and to begin the pull out within 16 months of becoming president.  I don’t know if that’s a viable schedule — I don’t know that it isn’t — but I trust him on this issue more than I trust McCain, who’s willing to have troops in Iraq much longer than Obama (and most of the nation).

When Obama goes to Iraq later this summer, I hope he listens to General Petraeus and Ambassador Crocker.  But I hope he returns as committed as ever to ending this war in Iraq.  The people demand it.  The military demands it (even if they won’t publicly say it) — they need to rest, retool and train for the next time they’re needed.  They can’t do that if they’re bogged down fighting two wars.

McCain might know how to win wars, as he said today.  But he’s promising more of the same as Bush.  Stay the course in Iraq.  Stay the course in Afghanistan.  We need something new.  Only Obama is promising that.