Congress should have learned by now that the people who they believe are targets of their legislation are almost always smarter than they are. So when they come up with what they think is brilliant legislation, it often doesn't accomplish it's objective, or even worse it encourages opposite behavior.

There was an article in The Wall Street Journal yesterday that explains a few ways that Wall Street can circumvent the $500,000 salary cap for Wall Street execs, which were being invented within minutes after the planned legislation was announced. This one was easy to beat...

• The bill only applies to the top management of Wall Street firms, not traders, hedge-fund managers and the genius 28-year olds who invent up all the impossible to understand derivatives.
• Almost all the jobs in a Wall Street firm can be sub-contracted out to other "independent" firms not subject to the legislation. Any job in a Wall Street firm can be sub-contracted, including top management.
• The proposed law doesn't inhibit the people who actually invent all the impossible to understand financial derivatives or manage the portfolios of the next wave of crappy assets.

The law is intended to punish those Congress thinks should be blamed for the current financial crisis, but will likely have the unintended consequence of encouraging tomorrow's Wall Street whiz-bangs to create a new set of financial problems for the next generation. And it certainly won't have the intended effect of encouraging Wall Street firms to either not take any more of the stimulus funds or repay the amounts they've already taken. In fact, Wall Street execs may be tempted to take greater risks in hopes of speeding up the repayment of the government stimulus injections. If their risks go bad, Uncle Sam will eat the losses--all uoside with no downside for the Wall Street traders.

About the only hope might be that some of the next generation of this stuff can be caught and stopped by government regulators--like those regulators who were supposed to prevent the salmonella in peanut butter.

This isn't a criticism of either the Republicans or Democrats--they both have done things that result in unintended consequences. They're simply not smart enough to outsmart the smarties.

Try to read the full article at http://online.wsj.com/article/SB123396963383059235.html although you may have to be a WSJ subscriber to open and read the entire article