I agree that it is fair for the government to negotiate the terms of its investment in any company that receives TARP funds. Any private investor would negotiate interest rate (or preferred dividends), repayment dates, and especially financial covenants and provisions regarding use of funds. Especially in these times, it is fair for the investor of last resort to impose some structure and limitations on senior executive compensation. However, a flat, uniform ceiling on cash compensation might be too much of a “one size fits all” solution. Some flexibility or proportionality, such as making the pay ceiling proportional to the amount of assets on the balance sheet, profits, overall compensation expense for the institution, or average salary for the institution, might be warranted and would allow the larger, more troubled institutions to compete with smaller, less leveraged institutions.

Moreover, the larger, overall theme of your blog is apropos. It’s time for senior members of our institutions, whether private or public, government or commercial, to start taking responsibility and showing some leadership.