Looks like a bunch of banks are going to repay their TARP money and thus get out from under the burdens of executive compensation restrictions and other TARP-related regulations. That said, merely repaying the funds won’t change the fact that all large financial institutions are now benefiting from a few different federal programs and an immensely valuable implicit federal guarantee. The moral of the story, I would say, is simply to underscore the need for real systematic regulation of the financial sector rather than ad hoc “strings attached” to bailouts. At the end of the day, the valuable thing that systematically significant institutions got from TARP was not so much the TARP money as investors and creditors’ knowledge that money would be provided in the future if necessary to prevent bank failures. That’s something the banks can’t “give back” nor can the government “take it away.” All we can do is try to set rules that make some sense out of the time-consistency issue that’s now been revealed to exist.