The New Bailout

[classicman]

With respect to limiting the pay of executives... from CNN

"Basically, this is encouraging the sales force -- the lifeblood of any company -- to look for work elsewhere, to leave [TARP-backed companies] for healthier companies where they can make more money," said Scott Talbott, senior vice president of government affairs for the Washington-based Financial Services Roundtable, a trade association representing 100 of the largest financial firms in the country.

"If the goal of TARP is to make companies stronger, to get them back on their feet so they can stand on their own, and this drives away key executives, this is a problem," he told CNN in a telephone interview.

Talbott also posed the question of what would happen on the Dodd amendment's sliding scale of restricted compensation at large firms when the top 20 earning employees are restricted and move down in income as a result.

"They are no longer that company's top 20 earners, others in the company now become the top 20. Are those 20 (then) under the compensation restrictions?" he asked.

Jim Reda, a New York-based compensation and corporate governance consultant, said TARP-funded firms could face a dilemma if the Dodd restrictions are imposed: either lose key executives to other companies or pay back the TARP money immediately and possibly jeopardize the company's capital position.

"It's not good for taxpayers to have [TARP] money in organizations where the executives are leaving or the company is weakened," Reda told CNN.

"My suspicion is that there are a lot of loopholes in this, " Reda said. "What it accomplishes is that it really confuses everybody."