Hey Banks - You've Been Punked!

We now live in an age where promises from government officials have a shorter life than mayflies:

Treasury Department lawyers have determined that firms participating in a $1 trillion program to relieve banks of toxic assets could be subject to limits on executive compensation, contradicting the Obama administration's previous public position, according to a report to be released today by a federal watchdog agency.

The disclosure comes amid a congressional investigation into whether the administration is abiding by a law limiting lavish pay for executives at firms that have benefited from the $700 billion bailout for the financial system.

Speaking last month about the initiative to buy toxic assets, Treasury Secretary Timothy F. Geithner said, "The comp conditions will not apply to the asset managers and investors in the program."

But Treasury lawyers have told the special inspector general for the federal bailout that executives involved with that initiative and another $1 trillion consumer lending program "could be subject to the executive compensation restrictions," according to the report from Special Inspector General Neil M. Barofsky.

These people are making it up as they go. Jennifer Rubin sums it up nicely:

Really, at this point any CEO who agrees to do business with the government should be fired. If he signs up with the government, he in essence is turning over control of his company to political operatives who bounce from position to position like ping pong balls. Public opinion squawks, they jump and the rules are different. This is the worst form of statist intervention — lawless and unpredictable. It operates outside any published regulatory regime or statute and without regard even for a gentleman’s promise. No business can operate successfully this way; the entire financial sector of our economy certainly cannot.

I don't think we've seen the bottom of the banking mess. Geithner keeps deepening the hole.