This morning, the U.S. Federal Reserve is expected announce that some banks will be allowed to repay the money lent to them under the Troubled Asset Relief Program (TARP). Some of the banks expected to receive approval are Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), American Express (NYSE: AXP), Morgan Stanley (NYSE: MS), State Street (NYSE: STT) and U.S. Bancorp (NYSE: USB). All of these banks have expressed interest in repaying the government. What is interesting is that there will be yet another Czar joining the White House, a "Repayment Czar," (what is the deal with the media's fascination with Russian royalty?) or as the administration will call the position, the "Special Master for Compensation."
Kenneth Feinberg is expected to be named to the position, according to "people familiar with the matter." This appointment could come as early as next week, which is expected to accompany the release of executive-compensation guidelines for firms receiving TARP assistance. Those companies will be subject to a number of compensation restrictions enacted by the Bush and Obama administrations, as well as Congress.
The position of repayment overseer is necessary, as "The law is confusing and a bit ambiguous, and so we're looking for certainty as to how to structure pay incentives," according to Scott Talbott of the Financial Services Roundtable. It is believed that Feinberg will help focus on pay restrictions for the TARP recipients, which should help the companies to interpret the rules and make sure they are followed.
Feinberg will report to Treasury Secretary Timothy Geithner, but should have "wide discretion" on how the rules should be interpreted. Despite this hierarchy, reports note that the companies will not be able to appeal Feinberg's decisions to Geithner.
I'm not sure that further layers of bureaucracy are the right step here, but it is nice to know that there are steps in place for some sort of TARP repayment.
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
Reader Comments (Page 1 of 1)
6-08-2009 @ 2:53PM
JCH said...
All quiet on the doom-and-gloom front.
TARP saved the world. Send your apologies to Paulson, Bush Obama, Geithner, Bernanke, and Summers.
6-17-2009 @ 11:30AM
algon said...
Thought the TARP money was to be used by banks to ease credit markets. Looks like bank management is more interested in their own bonus stucture, and less worried about the easing of credit markets, so they will return the federal bailout money. Time for a new game plan.