Among some good news from the COP about lower pay are signs that Wall Street is already finding a run-around.

Remember how Wall Street isn't paid enough (even while executive pay has hit new records)? It looks like some people might disagree. The Congressional Oversight Panel, which oversees TARP, just released a report on the efforts of the specially created Office of the Special Master for Executive Compensation to deal with outrageous compensation at companies that preformed so badly they needed us to bail them out. The good news? The Special Master (a great title if ever there was one) has gotten compensation at the recipients of "exceptional taxpayer assistance" (i.e. AIG, Bank of America, Chrysler, Chrysler Financial, Citigroup, General Motors, and GMAC/Ally Financial) down 55% for the 25 top paid employees. The Master also shifted pay from cash to stock in an effort to actually tie pay to performance (a new concept around Wall Street). The hope is that this can help cut down on the freewheeling, risk-loving adventures that got us into this mess.

The bad news? The Special Master didn't find that any of the bloated pay given out before TARP was "contrary to the public interest" and therefore didn't claw any of it back. (This even though he found that $1.7 billion in payments were "disfavored" and "not necessarily appropriate.") The COP was pretty troubled by this tightrope walk -- its report stated that this

may appear to the public to be excessively legalistic, it may represent an end-run around Congress' determination that the Special Master should make every effort to claw back wrongful payments, and it may give the impression that the government condoned inappropriate compensation to executives whose actions contributed to the financial crisis.

Yup, pretty much. The Special Master has also put the details of his decisions into a "black box," preventing any other experts from duplicating his work and cracking down on firms in the future.

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And while the goal of getting pay aligned with performance is important (if not a little forehead smackingly "duh"), tying it so heavily to stock might create its own perverse incentives. After all, executives can play risky games with the stock price to get their pay up. Not to mention that bankers have already found ways around this to increase their profits even when their company's stock suffers. A recent NYTimes story laid the details bare:

Using complex investment transactions, they can limit the downside on their holdings, or even profit, as other shareholders are suffering.

More than a quarter of Goldman Sachs's partners, a highly influential group of around 475 top executives, used these hedging strategies from July 2007 through November 2010, according to a New York Times analysis of regulatory filings. The arrangements were intended to protect their personal portfolios when the firm's stock was highly volatile, especially at the height of the crisis.

In some cases, executives saved millions of dollars by using these tactics. One prominent Goldman investment banker avoided more than $7 million in losses over a four-month period.

The government has barred those firms that received multiple bailouts from hedging until they've paid the funds back -- but others are getting in on the action now. And while most high-level execs are barred from this practice and shareholders can see whether they engage in it, the activity of lower-level execs is unhampered and mostly hidden. This makes it even more likely they will be personally aligned against the fate of their own company. As Patrick McGurn, a governance adviser at RiskMetrics, told the NYTimes, "Many of these hedging activities can create situations when the executives' interests run counter to the company."

Don't expect the Gordon Gekko-like practices to let up anytime soon.

Bryce Covert is Assistant Editor at New Deal 2.0.