Congress Probes Geithner’s End-Run Around Executive Pay Limits
Here’s a saga worthy of much more attention than it’s getting: A House oversight panel launched an investigation Monday into the Treasury Department’s plans to elude Congress-passed executive pay limits on bailout recipients by creating middleman agencies to filter the funds.
The Treasury’s strategy, first reported by The Washington Post over the weekend, is a clever one: Bailout money shuffled to banks through these “special purpose vehicles” won’t technically have come from the government — at least not directly — and therefore conditions like executive pay limits won’t apply to the eventual recipients. (Those familiar with the Enron scandal will remember the dubious role of special purpose vehicles.)
But it’s a strategy that might also be illegal, and Rep. Edolphus Towns (D-N.Y.), who just happens to chair the House Oversight and Government Reform Committee, is looking into the matter. In a letter sent Monday to Treasury Secretary Tim Geithner, according to The Post, Towns didn’t mince words about his displeasure with the end-around Congress:
“It would be unconscionable and irresponsible for the Treasury Department to permit excessive pay practices to continue at companies that have been rescued by the taxpayers,” Towns wrote in the letter. “I will strongly oppose any attempt to weaken or bypass these restrictions, or to violate the spirit, if not the intent, of these laws.”
The sharp tone of the letter marks a rare instance of a powerful Democrat calling the young Obama administration — still very much in its honeymoon phase, in the eyes of most Democrats — onto the carpet.
No response this morning from Towns’ office*, but this is an episode worth watching.
**Update: Towns’ spokeswoman Jenny Rosenberg said that the Treasury has yet to respond to the letter. *