TARP: Taxpayers Against Ridiculous Pay

These days, working on Wall Street sucks. A retired financier recently told the New York Times, “I’d almost rather say I’m a pornographer,” Another investment banker recalled telling an acquaintance what she did professionally, only to be met with palpable disdain: “Oh, you’re one of those.”

Not only is Wall Street being blamed for this nasty recession (which is intellectually lazy, given that ratings agencies rubber-stamped toxic securities and consumers leveraged the value of their homes for lifestyles they couldn’t afford), but the most compelling reason to work there -- the paycheck -- is in jeopardy.

I applaud the new president’s actions, but concur with charges of political grandstanding, insofar as the salary caps aren’t being enforced retroactively: Institutions lucky enough to have grabbed a fistful of dollars before Wednesday -- and who can avoid having to return to the trough -- are exempt.

Now, my colleague Scott Reeves will tell you that any limitation of executive pay is outright communism, and will so drain New York's talent pool that London will emerge as the financial capital of the world. His sentiments are echoed not just by other contributors to this site, but by writers of all political stripes, including Megan Barnett over at the excellent Portfolio.com. She cautions this is all a “misguided attempt to quiet the peanut gallery.” That would be you, by the way - part of some thoughtless riff-raff that needs to be appeased.
But let me ask you this: With the exception of the disbursement of the first $350 billion of TARP, can you think of a single instance when so much money was awarded with so few strings?

Maybe you’ve got a credit card, but you’re not using it unless you leave the store with a giant flatscreen. Maybe you have a teenage daughter, but you’re not bribing her unless she agrees to stop seeing that roughneck you don’t approve of. Simple.

The October 2008 rescue package, on the other hand, asked next to nothing of its beneficiaries - and, according to the Washington Post, saw restrictions on compensation  voided by an eleventh-hour revision. The small semantic change “stipulated that the [compensation] penalty would apply only to firms that received bailout funds by selling troubled assets to the government.”

Conveniently, the architects of TARP reversed course: Instead of a warehouse for toxic assets, the program became a cash infusion. This is known in legal parlance as a “giant f*%king loophole.”