Proposed Restrictions
Recently, Rep. Barney Frank the chairman of the House Financial Services Committee announced the new, proposed restrictions for the release of the second $350 billion in TARP funds. The bill proposes:
1. The pay of executives employed by TARP would be capped in a standardized manner, regardless of what type of aid they received under the program. It would also make the pay limit provision retroactive to existing program participants. Frank said: “If they don't like it, they can give the money back,” referring to the retroactive limits on executive pay.
2. The U.S. Treasury would have to dedicate at least $40 billion to reduce home foreclosures, with a plan developed by 3/15/09.
3. Small banks would be given more access to TARP funds and private aircraft or aircraft leases would have to be divested.
4. No golden parachute payments as long as the bank has government capital.
5. Require the Treasury to develop a program to stimulate home sales by ensuring affordable mortgage rates.
Rep. Frank's bill may not pass the Senate with the filibuster-free 60 votes needed to send the legislation to incoming President Obama’s desk, but by drafting this legislation, Frank is making a clear statement what form he wants the remaining TARP allotment to take: greater help for homeowners, lower compensation for bank executives, more help for smaller banks, and more accountability.
Furthermore, the retroactive pay limit is certain to displease Republicans and a few Democrats, as well, so it will be interesting to see if Frank is willing to compromise this part of the bill in order to get the legislation passed. The bill is still being finalized, but Frank’s draft was released after consultation with Bush administration and incoming Obama administration officials.
1. The pay of executives employed by TARP would be capped in a standardized manner, regardless of what type of aid they received under the program. It would also make the pay limit provision retroactive to existing program participants. Frank said: “If they don't like it, they can give the money back,” referring to the retroactive limits on executive pay.
2. The U.S. Treasury would have to dedicate at least $40 billion to reduce home foreclosures, with a plan developed by 3/15/09.
3. Small banks would be given more access to TARP funds and private aircraft or aircraft leases would have to be divested.
4. No golden parachute payments as long as the bank has government capital.
5. Require the Treasury to develop a program to stimulate home sales by ensuring affordable mortgage rates.
Rep. Frank's bill may not pass the Senate with the filibuster-free 60 votes needed to send the legislation to incoming President Obama’s desk, but by drafting this legislation, Frank is making a clear statement what form he wants the remaining TARP allotment to take: greater help for homeowners, lower compensation for bank executives, more help for smaller banks, and more accountability.
Furthermore, the retroactive pay limit is certain to displease Republicans and a few Democrats, as well, so it will be interesting to see if Frank is willing to compromise this part of the bill in order to get the legislation passed. The bill is still being finalized, but Frank’s draft was released after consultation with Bush administration and incoming Obama administration officials.
posted by Jim O'Leary | 12:00 AM
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