Geithner denies White House sidestepping CEO pay limits

By GottaLaff

My original post about this here. This is the latest:

U.S. Treasury Secretary Timothy Geithner denied on Sunday the Obama administration was crafting bailout initiatives to allow companies to evade limits on executive pay and other restrictions imposed by Congress.

"No, that's not true," Geithner said when asked about a report in Saturday's Washington Post that the White House was trying to allow some exceptions.

"Now, our obligation is to apply the laws that Congress just passed on executive compensation and we're going to do that," he told the CBS program "Face the Nation."

"We're also going to make sure that these programs are as effective as possible in making credit more available to businesses and families across the country."

The Post said President Barack Obama's administration believes it can sidestep the rules because it has in many cases decided not to provide federal aid directly to the financial institutions, instead setting up special entities that act as middlemen to channel the funds. [...]

Geithner also said the U.S. government would not hesitate to oust management of big banks that require "exceptional assistance," as it did last week with General Motors.

He noted the government had shaken up management at financial institutions Fannie Mae, Freddie Mac and AIG, "and we'll do that in the future if that is necessary."

Obama senior adviser David Axelrod told "Fox News Sunday" the president does not want to discourage companies from participating in the Treasury programs, but has a tough set of standards on executive pay.

"On some of these programs, we're asking financial companies to come in and help solve this problem by providing more lending, by buying up toxic assets and so on," he said. "We don't want to create disincentives and undermine the program.

"So we have to look very closely at this, making sure that we're not rewarding people for irresponsibility, that people -- that firms that get extraordinary help -- aren't getting, aren't giving out huge bonuses."

"Absolutely, because we want the American taxpayers' assistance going to generate greater lending -- not providing excess compensation," he told CBS.

"It is very important to us that every dollar of assistance we provide goes to expand lending."

Obama administration sidesteps bailout rules

By GottaLaff

I may need a talking down. Anyone?

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.

Although some experts are questioning the legality of this strategy, the officials said it gives them latitude to determine whether firms should be subject to the congressional restrictions, which would require recipients to turn over ownership stakes to the government, as well as curb executive pay.

The administration has decided that the conditions should not apply in at least three of the five initiatives funded by the rescue package.

This strategy has so far attracted little scrutiny on Capitol Hill, and even some senior congressional aides dealing with the financial crisis said they were unaware of the administration's efforts. Just two weeks ago, Congress erupted in outrage over bonuses being paid at American International Group, with some lawmakers faulting the administration for failing to do more to safeguard taxpayers' interests.

Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, said the congressional conditions should apply to any firm benefiting from bailout funds. He said he planned to review the administration's decisions and might seek to undo them. "We have to make certain that if they are using government money in any sort of way, there should be restrictions," he said.

A Treasury spokesman defended the approach. "These programs are designed to both comply with the law and ensure taxpayers' funds are used most effectively to bring about economic recovery," spokesman Andrew Williams said.

There is much more, and my head is already spinning from other things. The rest of this report just added to that.

H/t: David G.

Auto industry updates

By GottaLaff

Via Breaking News Tweets:

Officials tell The Associated Press that the Obama administration is giving General Motors financing for 60 days to restructure; Chrysler will get up to $6 billion and 30 days to complete alliance with Italian automaker Fiat.

Slooowwww right now.

Honk if you don't need $2 billion: GM 'does not need March funding'

By GottaLaff

Hey, if GM doesn't need the $2 billion, I'll take it:

US carmaker General Motors has said it will not need the $2bn (£1.45bn) of funding it had previously requested for March from the government.

GM said the development reflected the acceleration of its efforts to cut costs. It had delayed spending planned for January and February, it added.

GM has already received $13.4bn in aid, and has requested another $16.6bn. [...]

GM said the $2bn requested for March would not be needed "at this time".

However, it did not indicate whether it would need the funds at a later date or if it planned to change its request for the $16.6bn asked for last month.

Wells Fargo cancels Las Vegas trip

By GottaLaff

And if there hadn't been an uproar...?

Wells Fargo & Co. abruptly canceled Tuesday a pricey Las Vegas casino junket for employees after a torrent of criticism that it was misusing $25 billion in taxpayer bailout money.

The company initially defended the trip after The Associated Press reported it had booked 12 nights beginning Friday at the Wynn Las Vegas and the Encore Las Vegas. But within hours, investigators and lawmakers on Capitol Hill had scorned the bank, and the company canceled.

[...] Previous all-expense-paid trips have included helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 of the company's top employees and guests.

"In light of the current environment, we have now decided to cancel this event as well," the company said Tuesday night in a news release that also said the it had never planned to use taxpayer bailout money for the trip.

Ahem. That last part kinda misses the point.

Bailed-out Bank of America spent $10 million on Super Bowl party

By GottaLaff

Maybe they held the Big Do inside a private jet on their way to another Big Do... or an $800,000 tent:

ABC News reports, however, that the bank managed to scrounge up millions of dollars to be an NFL sponsor and for “a five day carnival-like” Super Bowl party just outside the stadium:

The event — known as the NFL Experience — was 850,000 square feet of sports games and interactive entertainment attractions for football fans and was blanketed in Bank of America logos and marketing calls to sign up for football-themed banking products. […]

The bank refused to tell ABC News how much it is spending as an NFL corporate sponsor, but insiders have put the figure at close to $10 million. The NFL Experience was on top of that and was inked last summer, according to the bank.

The NFL said it was a “multi-million dollar” event and that it was also spending money to put on the event. A Super Bowl insider said the tents alone cost over $800,000.

Calling Attorney General Holder...

Obama gets first major win with TARP

By GottaLaff

Everyone loves a winner, and the Winner-elect won some Senators over:

Not yet in the White House but working the phones as if he were, Barack Obama won a crucial Senate vote Thursday clearing the release of $350 billion more in bailout funds from the Treasury Department’s controversial financial rescue program.

For the incoming president, the 52-42 roll call represented his first major test of strength, and he threw himself into the fight this week, reaching out to both sides of aisle and making close to a dozen phone calls, many targeted at Democratic freshmen who won with his help in November. [...]

Republicans were more skeptical, but in an open appeal for their votes, the Obama camp released a new letter prior to the vote saying it had “no intention of using any funds to implement an industrial policy.”

The letter, signed by Obama economic adviser Lawrence Summers, also pledged that $50 billion to $100 billion of the new funds would be committed to a “sweeping effort to address the foreclosure crisis” — a major issue for both parties.

The latest draft also suggests that high-paid CEOs at companies helped by Treasury will be required to take a portion of their salary in restricted stock or some similar form “that cannot be liquidated or sold until the government has been repaid.”

Obama Issues First Veto Threat

By GottaLaff

Democrats claimed they would stand up to P.E. Obama (as opposed to what they did for the past 8 years with the Moron in Chief). Turnabout's fair play:

President-elect Barack Obama made his first veto threat Tuesday in a closed-door meeting with Senate Democrats. Obama told his former colleagues that if Congress passes a resolution blocking release of the second half of the financial bailout funds he will veto it, said Sen. Joseph Lieberman after leaving the caucus meeting. [...]

Obama spoke for about fifteen minutes and then spent much of the rest of the hour-plus meeting answering questions. Sen. John Kerry (D-Mass.) spoke on behalf of increased spending on energy independence and alternative energy as a way to stimulate the economy. "You add up all the benefits of it and it's really quite extraordinary," said Kerry. [...]

Sen. Claire McCaskill (D-Mo.), a top Obama surrogate during the campaign, said that Obama repeatedly stressed the urgency of getting access to the TARP funds quickly and spent the bulk of the meeting on the subject. "The single message that was most consistent was that time is of the essence. There's a sense of urgency," she said.

Because of that urgency, McCaskill said, Obama told the group that he understood that the Senate may not have the time it needs to develop a proper oversight package. He asked his former colleagues not to let that slow down the release of the funds, promising to conduct the oversight they expect and operate with transparency.

GOP senators said Tuesday they were not enthusiastic about releasing the second half of the funds. [...]

If Congress releases the funds without a new oversight bill, it will rely on a gentleman's agreement of sort between congressional Democrats and Obama. The framework for such an agreement was debated in a House Financial Services Committee hearing Tuesday. "This is a 'trust but verify' bill," said committee chairman Barny Frank (D-Mass.).

McCaskill, though, said she thinks Obama may get enough votes out of the Senate to approve the funds, obviating a veto. "We didn't take a caucus vote, but he needs fifty votes out of the caucus. I'd be shocked if he didn't get it," she said.

H/t: Ellen