Treasury Announces New Restrictions On Executive Compensation

On February 4, 2009, the U.S. Treasury Department, in accordance with a strong statement by President Obama, issued a new set of guidelines (the "Guidelines") on executive pay for financial institutions receiving government assistance under the Troubled Assets Relief Program ("TARP"). TARP is the designation for the overall program under which the U.S. Treasury Department originally was to acquire billions of dollars in troubled assets currently authorized by the Emergency Economic Stabilization Act of 2008, which was passed on October 3, 2008 ("EESA"). The U.S Treasury Department abandoned its original plan to buy troubled assets from financial institutions and used TARP money to make direct equity investments in financial institutions. We expect that there will be additional developments regarding the executive compensation rules as Congress continues to debate the terms of an additional economic recovery package.