As financial institutions close on Treasury purchases through the Troubled Asset Relief Program and the Capital Purchase Program, management and compensation committees now turn to the task of implementing the related executive compensation restrictions.

The restrictions announced Feb. 4 encourage all public financial institutions to review their compensation programs to ensure sound risk management. Though participating community banks are healthy organizations, many of the requirements are expected to cascade beyond Tarp participants, just as the Enron/WorldCom scandals drove broad regulatory requirements across all industries.

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