Pay Limits May Apply To Toxic-Asset Relief Program, Report Says (Barofsky)

[girl gone mad]

Hmm... I wonder how long it will be before the banks decide they don't need the TALF bailouts after all..

Pay Limits May Apply To Toxic-Asset Relief Program, Report Says
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/20/AR2009042003294_pf.html">Washington Post

Treasury Department lawyers have determined that firms participating in a $1 trillion program to relieve banks of toxic assets could be subject to limits on executive compensation, contradicting the Obama administration's previous public position, according to a report to be released today by a federal watchdog agency.

The disclosure comes amid a congressional investigation into whether the administration is abiding by a law limiting lavish pay for executives at firms that have benefited from the $700 billion bailout for the financial system.

Speaking last month about the initiative to buy toxic assets, Treasury Secretary Timothy F. Geithner said, "The comp conditions will not apply to the asset managers and investors in the program."

But Treasury lawyers have told the special inspector general for the federal bailout that executives involved with that initiative and another $1 trillion consumer lending program "could be subject to the executive compensation restrictions," according to the report from Special Inspector General Neil M. Barofsky.

The Treasury's general counsel's office said in an April memo attached to the report that pay for employees of the Federal Reserve Bank of New York could also be limited because of their role in running the consumer lending program.

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/20/AR2009042003294_pf.html">More...

[w4rma]

1. TARP (Toxic-Asset Relief Program) bailouts (nt)

[girl gone mad]

2. TARP went TALF last November..

Though TALF hasn't been fully implemented yet. TARP was never actually used to buy toxic assets, as originally intended. Instead, the money was spent on things like debt for equity swaps and counterparty payouts.

When the Post writes

But Treasury lawyers have told the special inspector general for the federal bailout that executives involved with that initiative and another $1 trillion consumer lending program "could be subject to the executive compensation restrictions," according to the report from Special Inspector General Neil M. Barofsky.

They're referring to TALF (eta: and PPIP). Here's a good primer form http://seekingalpha.com/article/108400-the-difference-between-tarp-and-talf">Seeking Alpha:

This past Tuesday, Treasury Secretary Henry Paulson introduced a new resolution to the current financial turmoil that is rocking our world's economic stability.

After the Federal Reserve first handed a $700 billion bailout plan to Congress in September to take toxic mortgage-backed securities off of balance sheets of banks - also known as the wall street bailout or the Troubled Asset Relief Fund (TARP) - was abandoned within a month of deploying. Ergo, the second bailout plan - Term Asset-Backed Securities Loan Facility (TALF) with an $800 billion implication.

So now we have TARP (bailout #1) and TALF (bailout #2), which after you get passed the overrated vernacular, the important questions remain - how'd we get from bailout #1 to bailout #2 and what is the difference between the two.

Paulson, who made the announcement earlier this month to change bailout #1 from its original buy-out plan, said they would basically now only invest in financial firms who need help by buying their stocks to encourage banks to unclench their lending hands, completely scratching out the original feature of buying up banks' troubled assets. Paulson went on and said doing this now would "not be the most effective way" to handle our financial problems.

Because the plan has averted and is definitively unknown, that doesn't mean the tax-paid bailout dollars dissipates or will be unused. The Treasury is projected to inject $250 billion into financial firms to help with liquidity and President Bush requested an additional $100 billion to save the floundering insurance group AIG and more recently, Citigroup (C). Since the idea of buying mortgage-backed securities from financial firms like JPMorgan Chase (JPM), Goldman Sachs (GS) and Morgan Stanley (MS) has been nixed, the remaining $350 billion will likely be left for the next administration to allocate.

Bailout #2, which consequently will not be tapped from our pockets rather from printing of more money, is known by some as the consumer bailout, and also a refocused plan to more-so help financial markets dealing with consumer asset-backed securities like auto loans, credit-card debt, and student loans. The new consumer program will allocate $200 billion by the Federal Reserve to security holders of consumer backed debt, essentially doing this will insure the debt if a borrower defaults. And backing the backers, the Treasury department will provide $20 billion from the $700 billion from bailout #1 funds to safeguard losses the Federal Reserve will incur.

[notesdev]

3. That's not what TARP really stands for

Try "Taxpayer Ass Raping Program"

[marketcrazy1]

4. so much for the TALF!!

I guess(ed) that is why participation so far has been limited. another FAIL for turbo timmy!!