Rebuke but No Consequences for Post-Bailout Bonuses
Posted on Jul 23, 2010
Sticks and stones and all that: U.S. bankers are probably glad today that, as the childhood rhyme claims, “words can never hurt me,” since the Obama administration’s so-called pay czar has decided to criticize them for paying out $1.6 billion in extra payments to top execs after they received federal bailout funds—but not seek any punishment.
Los Angeles Times:
The Obama administration’s pay czar on Friday criticized Goldman Sachs, Bank of America, Citigroup, Wells Fargo and 13 other financial firms that received bailout money for making a total of $1.6 billion in bonus and other payments to highly paid executives during the height of the financial crisis in late 2008 and early 2009.
But though he called the payments “ill-advised,” there will be no attempt to get the firms to pay back the money, said Kenneth R. Feinberg, the special master for executive compensation under the $700-billion Troubled Asset Relief Program or TARP. Instead, Feinberg has asked the boards of those firms to voluntarily adopt a so-called “brake provision” that would allow such payments to be withheld during another financial crisis.
The companies have said they would consider the proposal, Feinberg said.
“I have not heard much pushback from these companies on this request,” he said. “They have not formally agreed. They have not formally disagreed. Some said we already do it.”