There's an interesting article in the New York Times about the provision in the stimulus package that sets forth tougher restrictions on executive pay and bonuses for the large companies on Wall Street receiving TARP funds. Here's the paragraph below:
Top economic advisers to President Obama adamantly opposed the pay restrictions, according to Congressional officials, warning lawmakers behind closed doors that they went too far and would cause a brain drain in the financial industry during an acute crisis. Another worry is the tougher restrictions may encourage executives to more quickly pay back the government’s investments since, in a compromise with the financial industry, banks no longer have to replace federal funds with private capital. That could remove an extra capital cushion, further reducing lending.
And here's more about the difference between the restrictions imposed on bonus pay by the White House and the provision authored by Senator Christopher Dodd:
The biggest difference between Mr. Dodd’s provision and the Treasury rules is that the new stimulus provision would apply to any company that either has received money or will receive money in the future under the Treasury’s financial rescue program. By contrast, the plan announced by Mr. Geithner would apply only to companies that receive federal money in the future.
The revised rules do not impose a formal cap on executive compensation, unlike the Treasury proposal. Under that plan, banks were barred from paying more than $500,000 in salary until they repaid the TARP funds to the government. (Banks were permitted to offer bonuses in restricted stock.) Senator Dodd’s rules, however, go a step further, prohibiting banks from awarding restricted stock to 25 top executives equal to more than one-third of their annual cash compensation until the banks have repaid all the money owed.
In addition, the Congressional rules would affect not just a bank’s top management, but also star traders, investment bankers, fund managers and commission-based sales representatives. They have traditionally received multimillion-dollar payouts based on their year-end results.
Jennifer R. Psaki, a spokeswoman for the White House, said President Obama “shares a deep concern about excessive executive compensation at financial firms that are receiving extraordinary assistance from American taxpayers.” But she hinted at the White House’s displeasure, saying that Mr. Obama “looks forward to working with Congress to responsibly address this issue.”
So, I'm guessing that the White House officials who warned their congressional Members about how the tougher restrictions on CEO pay and bonuses will cause a brain drain to hedge funds and foreign banks were Larry Summers and Timothy Geithner. It seems that Summers and Geithner have still not correctly gauged the amount of public anger at Wall Street CEOs and executives using our taxpayer money (billions of it, in fact) to augment their flagrant livestyles. When will it be time for them to wake up to the populist anger going on in America?