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This none-too-impressed reaction appears to be common among commentators taking on pay czar Kenneth Feinberg's decree that banks and companies that have yet to pay back TARP money will have to drastically curb executive compensation. "[W]hat's striking is how provisional and fleeting the whole thing appears," writes The Deal editor in chief Bob Teitelman. It's like a giant carrot waved at big, battered banks like Bank of America Corp. (NYSE:BAC) and Citigroup Inc. (NYSE:C): Hoard your resources, get your act together, so you can pay us back like the rest of the TARP banks and set your own pay again. That's not exactly how you'll get those banks to lend again -- if that's the goal -- and it does seem to create an incentive to bet big, if only to escape. In short, it feels exactly like what it is: a short-term response to a political tempest. Indeed, Treasury Secretary Timothy Geithner said Thursday, "We all share an
interest in seeing these companies return taxpayer dollars as soon as
possible, and Ken today has helped bring that day a little bit closer." Like Teitelman, Washington Post business columnist Steven Pearlstein is skeptical about the long-term effects of the pay cuts. "By themselves, these measures won't prevent future crises," he writes, adding, "nor will they likely do much to lower the prevailing pay levels on Wall Street or in corporate America." The latter is precisely the point that Joe Nocera at The New York Times makes. Nocera argues that on its own Wall Street has already moved to "better align pay with longer-term performance," but these shifts still haven''t kept pay down" -- (ahem, Goldman). "And even with the changes," he writes, "the executives affected by [Feinberg's] ruling aren't exactly going broke. ... for instance, when you add up both the cash and stock components, 14 of Citigroup's highest-paid executives still stand to make $5 million to $9 million each." All in all, Feinberg's goal of changing the "ethos of executive pay" was unreachable. No pay czar can do that, Nocera argues. "That's something only shareholders can do." Teitelman, too, addresses the role -- or lack thereof -- of shareholders: "The odd thing is that all the solutions to the problem of pay involve more, not less, exposure to the markets. Shareholders must receive greater powers. More pay must come in the form of shares, not cash." However, Teitelman says, shareholders, if given the opportunity, may not attempt to rein in pay. What's lurking below all the Talmudic commentary on incentives and governance is an untested and arguable theory: That a free and rational market will naturally reduce the massive compensation of senior executives, despite the historical reality that rising pay tracked the rise to preeminence of the efficient market hypothesis. For more reactions, see Megan McArdle's blog at The Atlantic here, this Daily Finance post and this from Fortune. - Sara Behunek
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"The Obama administration's move this week to slash the pay of top executives at 'too big to fail' firms under TARP should be applauded. And that ovation should last for about one second," writes 
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