The New Treasury Caps on Salary

Treasury has released new rules on executive compensation for financial institutional that receive federal bailout funds.  In essence, those that get exceptional amounts cannot pay executives more than $500,000 in cash and, if they use stock or stock options, the equity cannot vest until the company has repaid all government loans or grants.  Those firms that dip into government bailout funds in "normal" ways can waive the caps only if their shareholders vote to approve to waiver.  Much ink will be spilled over this new announcement.  But I have three comments.  First, the government has discovered a very effective way to force companies to repay government grants and loans.  These caps will be very unpopular with management, who will rush to escape the provision by repaying the government as quickly as possible.  Second, the provisions are not retroactive and they could be.  Treasury could have forced companies to repay the "shameful" bonuses already paid and could have forced companies who have already accepted money but will accept no more to adhere to the caps.  So a bank that has taken $25 billion and will not take anymore, can pay under the old rules.  And third, interestingly, a bank that needs funds could refuse them, go through the take Chapter 11 like reorganization procedure for banks, and still pay executives, in the reorganization and thereafter, more than the caps provide.  Is this an incentive to go through insolvency proceedings?