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Fed Eliminates Compensation Limits for TALF SponsorsBloomberg.com: Worldwide
From: David Farber <dave () farber net>
Date: Tue, 3 Mar 2009 13:00:26 -0500
Fed Eliminates Compensation Limits for TALF Sponsors (Update1)
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By Scott Lanman
March 3 (Bloomberg) -- The Federal Reserve eliminated executive-
compensation limits for sponsors of asset-backed securities accepted
under a new $1 trillion program, indicating the rules may have
hampered efforts to get the plan underway.
The Fed isn’t applying the requirements to the Term Asset- Backed
Securities Loan Facility because of the government’s “desire to
encourage market participants to stimulate credit formation and
utilize the facility,” the New York Fed said in a question-and-answer
document on its Web site today.
The change suggests the government doesn’t intend to apply
compensation limits beyond firms that receive direct investments from
the Treasury’s $700 billion bailout fund. Officials have yet to
announce whether such requirements will be imposed on firms
participating in a separate effort to remove as much as $1 trillion of
distressed assets from banks’ balance sheets.
“Executive compensation restrictions are targeted towards ensuring
that executives of institutions that receive government support are
not unjustly enriched,” the New York Fed said in a separate question-
and-answer document on its Web site.
The revised terms and conditions of the TALF, posted on the New York
Fed’s Web site, also omitted a previous section on compensation
requirements. The limits were previously instituted because the
program is being seeded with capital from the $700 billion financial-
stability plan, which has provided capital injections to banks with
compensation rules attached.
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- Fed Eliminates Compensation Limits for TALF SponsorsBloomberg.com: Worldwide David Farber (Mar 03)