On the surface it's a stunning success story. Huge, back to back payoffs in TARP money - $20 billion Monday from Citibank, $45 billion last Thursday from Bank of America - two of the programs largest recipients, with and both claiming an air of deep appreciation.
"We owe taxpayers our thanks" said Bank of America. Citibank said "we owe ... taxpayers a debt of gratitude." And while there no reason to think that's not true, the fact is the paybacks also allow both banks to escape the bonus limitations about to be imposed by Pay Czar Kenneth Feinberg, reports CBS News correspondent Wyatt Andrews.
As long as the banks were under TARP, Feinberg had limited executive salaries to $500,000 a year and made stock-based bonuses untouchable for at least two years. Last night on 60 Minutes, President Obama said some bank executives were paying off TARP to get around the limits on what they pay themselves.
"Do you think that's why they paid it back specifically?" asked 60 Minutes correspondent Steve Kroft.
"I think in some cases that was a motivation," Mr. Obama said. "Which I think tells me that the people on Wall Street still don't get it. They don't get it - $10, $20 million bonuses after America went through the worst economic year that it's gone through in decades, and you guys caused the problem."
Some banks not facing restrictions already have big bonuses in the works. At Goldman Sachs $16.7 billion has been set aside for yearend salaries and bonuses.
And it's no accident that Citibank and Bank of America are paying back TARP funds now - it's just in time for bonus season.
"No question about it," said Nell Minow with the Corporate Library. "The culture on Wall Street is those wonderful big bonuses in December."
The banks meanwhile are delighted to have escaped the pay czar rules, but the rules were also costing the banks top talent, and as one executive said, "they had to escape the stigma of being under Government control."