Punitive taxes on compensation that takes the form of long-term restricted equity stakes is a dangerous and destructive move. If the compensation bill that emerges from the conference committee does not allow TARP-receiving companies to offer such SVCSs, then Obama should veto it.

And if the traders of Wall Street then quit en masse? If they say that they are going to “Go Galt” if they don’t get their traders’ options to take the money upfront after assuring us shareholders that they have made us a lot of money, that their positions and strategies are sound, and that they have prudently managed the risks? Well, then that tells us something about what they really think the true value of their work product has been.

via Grasping Reality with Both Hands: Needed for AIG and the TARP: Silicon Valley Compensation Schemes.

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