Bailed-Out Executives Got $1.6 Billion In 2007

Banks that have their hands out in Washington this year were handing out multimillion-dollar rewards to their executives last year.

The 116 banks that so far have received taxpayer dollars to boost them through the economic crisis gave their top tier of executives nearly $1.6 billion in salaries, bonuses and other benefits in 2007, an Associated Press analysis found.

That amount, spread among the 600 highest paid bank executives, would cover the bailout money given to 53 of the banks that have shared the $188 billion that Washington has doled out in rescue packages so far.

Some banks trimmed their executive compensation in the face of faltering performance that foreshadowed the current economic crisis, but they still granted multimillion-dollar packages. Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.

Such bonuses amount to a bribe for executives "to get them to do the jobs for which they are well paid in the first place," said Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services committee.

"Most of us sign on to do jobs, and we do them best we can," said Frank. "We're told that some of the most highly paid people in executive positions are different. They need extra money to be motivated!"

The AP review of annual reports that the banks file with the Securities and Exchange Commission found that the average paid to each of the banks' top executives was $2.6 million in salary, bonuses and benefits.

Among other findings:

Story continues below

advertisement

_ Lloyd Blankfein, president and chief executive of Goldman Sachs, took home nearly $54 million in compensation last year. The company's top five executives received a total of $242 million.

This year, Goldman's seven top-paid executives will work for their base salaries of $600,000, with no stock or cash bonuses, the company said. Last spring, before Wall Street's staggering losses and layoffs mushroomed, Goldman described its pay plan as essential to retain and motivate executives "whose efforts and judgments are vital to our continued success, by setting their compensation at appropriate and competitive levels." Goldman spokesman Ed Canaday declined to comment beyond that written report.

The New York-based company, after gains last year, on Dec. 16 reported its first quarterly loss since it went public in 1999. It received $10 billion in taxpayer money on Oct. 28.

_ Even where banks cut back on pay, some executives were left with seven- or eight-figure compensation that most people can only dream about. Richard D. Fairbank, the chairman of Capital One Financial Corp., took a $1 million hit in compensation after his company had a disappointing year, but still got $17 million in stock options. The McLean, Va.-based company received $3.56 billion in bailout money on Nov. 14.

_ John A. Thain, chief executive of Merrill Lynch, topped all corporate bank bosses with $83 million in earnings last year. Thain, a former chief operating officer for Goldman Sachs, came to Merrill Lynch in December 2007, avoiding the blame for a year in which Merrill lost $7.8 billion. Since he began work late in the year, he earned $57,692 in salary, a $15 million signing bonus and an additional $68 million in stock options.

Like Goldman, Merrill tapped taxpayers for $10 billion on Oct. 28.

The AP review comes amid sharp questions about the banks' commitment to the goals of the Troubled Asset Relief Program, a law designed to buy bad mortgages and other troubled assets. Last month, the Bush administration changed the program's goals, instructing the Treasury Department to pump tax dollars directly into banks to prevent wide economic collapse.

The program set restrictions on some executive compensation for participating banks, but did not limit salaries and bonuses unless they had the effect of encouraging excessive risk to the institution. Banks were barred from giving golden parachutes to departing executives and deducting some executive pay for tax purposes. Some banks are forgoing bonuses and restricting other compensation.

The records detailing last year's pay packages show that personal financial advice was among the executive perks. Wells Fargo of San Francisco, which took $25 billion in taxpayer bailout money, gave its top executives up to $20,000 each to pay financial planners.

At Bank of New York Mellon Corp., chief executive Robert P. Kelly's stipend for financial planning services came to $66,748, on top of his $975,000 salary and $7.5 million bonus. His car and driver cost $178,879. Kelly also received $846,000 in relocation expenses, including help selling his home in Pittsburgh and purchasing one in Manhattan, the company said.

Goldman Sachs, paying as much as $233,000 for an executive's car and driver, told its shareholders that financial counseling and chauffeurs were needed so executives would have more time to focus on their jobs.

JPMorgan Chase chairman James Dimon ran up a $211,182 tab for private jet travel last year when his family lived in Chicago and he was commuting to New York. The company received $25 billion in bailout funds.

Banks cite security to justify personal use of company aircraft for some executives. But Rep. Brad Sherman, D-Calif., questioned that rationale, saying executives visit many locations more vulnerable than the nation's security-conscious commercial air terminals.

Sherman, a member of the House Financial Services Committee, said pay excesses undermine development of good bank economic policies and promote an escalating pay spiral among competing financial institutions _ something particularly hard to take when banks then ask for rescue money.

He wants them to come before Congress, like the automakers did, and spell out their spending plans for bailout funds.

"The tougher we are on the executives that come to Washington, the fewer will come for a bailout," he said.

___

On the Net:

SEC Filings & Forms: http://www.sec.gov

Emergency Economic Stabilization Act: http://www.treas.gov/initiatives/eesa/

(This version CORRECTS SUBS 15th graf to correct name of program, Asset sted Assets;. Moving on general news and financial services.)

Comments

[AZ4thatone]

And don't forget, the bail-out money was supposed to be used to loosen up the markets for the average person. Instead, the banks kept the money, reversed everyones lines of credit and used the bailout money for more aquisitions. Priceless? Not really, we'll pay for it for years. Disgusting.

[Chaimirija]

Not if we fight back. I am willing. Anyone else?

[FreetoBme]

I think the reason you don't have any takers is because we really don't know how, or to whom to protest.
The Bush administration, the (mostly) Democratic Congress, led by, (what is she?) Palosi,
Paulson and the Treasury and even Obama and McCain have backed this rape.
Obama said when he went to Washington to vote for the bail out, "There will be time enough to punish the wrong doers".
Shall we all hold our breath until those who deserve it get what they have earned?

[JessWonderin]

hmmmmm . . . so explain to me AGAIN, why we "taxpayers" needed the banks' to PAY BONUS and Options perks to "retain" the very SAME" dingle-berries that DROVE them into bankruptcy???

Seems they could have filled the positions quite will by adverting the positions with a $15,000 salary and a new Chrysler Charger . . . both taxpayers and auto industry "wins" AND the banks get just as useless an employee MUCH CHEAPER . . . .

[tellbarackdotorg]

I agree. Give them the Chargers.
What I don't understand is exactly where all of these high-price executives are going to bail out to if they are dissatisfied with their Wall Street bonuses? Is there another dimension out there where there are well-run, profitable investment banks that are drooling to get their hands on these guys? So they can do the same thing to them next? If so, that’s where I want to know where they are. That’s where I want what’s left of my 401k to be invested.

[2garen]

Let us start with each rep that passed Gramm-Leach. Every Congressman that voted for it has to be voted out of office.Sen­ators must also be held accountable.
We demand our back! Now!
Itʻs the corruption!!!!!

[killmenow]

The only way that a significant number of Americans will march in the streets to protest the financial scams being played against the taxpayers of this country will be to cut of everyone's cable TV. 'Til then, this all will continue as before, and we will all feel helpless.

[Chaimirija]

At this point, as a matter of principal, I amy just cut the cable out, as well as using the credit cards...ag­ain, any takers?

[e-mail]

[killmenow]

Been there done that. Still there.

[jalowe1957]

Let's hope those golden parachutes are replaced with golden anvils so those CEOS who are bailing out can get one hell of a rude awakening.

[SekhmetHathor]

my thoughts exactly

[watchandwait]

The sad truth is, laissez-faire capitalism isn't going anywhere anytime soon, because the super-rich, the super-greedy, the economic intelligentsia, the politicians who genuflect before the rich/greedy in exchange for power, and the simple folk who admire these people and hope to be like them someday can't imagine another system being put into place. At the suggestion, the first thing that libertarians, conservatives, neo-cons and clueless Dems will scream is "socialism"! (which is sad). Adam Smith expected the "invisible hand" would correct any imbalances in the market; what he didn't count on was the fact that the market would get so large, so many players would have a stake in it around the world, and the "corrections" would come in the form of the average person paying successively more in taxes for decades (as long as their job holds up).

[Slapmewhenitsover]

We are only 100 years removed from the times of Eugene Debs, Mother Jones, Helen Keller and many other social activists who fought against the very issues we face again today.
Unfortunately, we have lost so much ground to the wealthy over those 100 years that we will never begin to recover any sense of equality again.
Thankfully, I will not be alive in another 100 years when the rich live in glass bubbles and the poor are ... well still just poor.
Let's start the honor roll for those who screw us with Bill Gates, Warren Buffett, The Walton Gang ...

Stop telling me this is not the truth!

[Carrie-On]

Slapme, some of our greatest social changes have been wrought by women, many with multiple responsibilities no less! Case in point: the Suffragettes. That is the reason that "DC" has failed to acknowledge women - not one monument to women's achievements much less a museum ~ it's not over until it's over. You haven't seen anything yet.

When our nation's women wake-up and start meeting together again (and it's going on now), this will soon stop. Once women begin to recognize what their fore-sisters have achieved, and the men who admire them, this will cease - first, our nation must begin to learn. (see http://www.coffeebreakreaders.com/ to obtain "The Right to Vote" (what women have done . . . ), by Virgina Harris). Perfectly easy reading that will open everyone's eyes.

Anyone who has had a part in defrauding America must be tired and prosecuted. BASTA.

[edwarvir]

Now this is why we need to MARCH ON WASHINGTON
BEFORE BUSH AND HIS PALS LEAVE OFFICE/ Anybody
else at any other job would be held accountable for
this sort of rip off. This is a sin. Who besides
wallstreet rewards bad behavior.

[Carrie-On]

Best to march on him in Dallas, in Old Preston area once they have "moved-in," and moved everyone else out on that street who have lived there for years for the Secret Service, at our expense -- AGAIN.

The sociopath did that in N. Dallas too before he went into "Pole-ticks" - that moved families out then, too and most of the families could not find home in the schools their kids were in. Those left there had to re-route their driving pattern to get to the Toll Road, too. Not happy neighbors when they're rudely uprooted by the Bushes.

These Bushes need to wake up. They're not wanted by the majority of neighbors, "access to SMU" or not. There are plenty of homes out in the country north of Dallas - in fact, the old "Dallas" home site was up for sale again - just perfect for "his nibs."

[missette]

Well trickle down economics was put to its ultimate test in the Bush years, and it failed. Where are all the new jobs? Where is the innovation? Where are the new companies that will lead America into the 21st century? According to the proponents of an economy that gives most of the riches to the top unth percent. all that would result if only we'd appreciate the genius of the masters of the universe and deregulate away to allow them to work their magic. So come on you Wall Street and corporate guys and gals, you got your wish beyond your wildest dreams. Show us the money!

[g35]

It"s par for the course for Obama and Biden, the men who promised "change" but in every step of their preparations for assuming office have pursued nothing but continuity, to acknowledge that they will protect cri minals in the Bush administration from prosecution for authorizing to rture, a complete viol ation of both the U.S. constitution and the Geneva Conventions.
When asked by ABC host George Stephanopoulos if top level Bush administration officials would be prosecuted for mandating prisoner abuse, Biden said that he and Obama would be "focusing on the future," adding "I think we should be looking forward, not backwards.­"
Such rhetoric goes to the very heart of the gigantic con job the "Obama change" hoax has wrought upon millions of befuddled Americans who naively presumed that voting for the lesser of two e vils would result in anything other than more e vil.

[blondecuban]

This was complete and utter fraud -- it still is.

[4thgendem]

By my rough calculations, $1.6 billion is enough to cover the cost of a 4 year college education for 26,000 students (at $60,000), the cost of health care for a year for 133,333 families of four ($12,000 per year), the average middle class salary ($56,000) for 28,571 wage earners, and breast cancer treatment for 6,400 women ($250,000 for surgery and chemo.)

[powder chowder]

GO DIRECTLY TO JAIL, DO NOT PASS GO, DO NOT COLLECT $200.

[IhaveaDREAMwhitegirl]

yup, funny money ....

[Realization]

You can solve this with a high marginal tax rate, high inheritance tax on large estates, no loopholes and strict enforcement. No room for the lawyers...­.

[jerrypenguin]

With all of their wealth and power, the execs deserve the best of gourmet delights. After their munificant feast, a taste of cold steel would be a just dessert.