Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)

Email this Article

Send with mail | ahoo instead.
Required Needs to be a valid email
Required Needs to be a valid email
Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year
http://mney.co/1HNlMwe
Required Please enter the correct value.
Twitter

Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year

By William Patalon III, Executive Editor, Money Morning • December 23, 2008

View Comments

Start the conversation

Comment on This Story Click here to cancel reply.

Or to contact Money Morning Customer Service, click here.

Your email address will not be published. Required fields are marked *

Some HTML is OK

William Patalon IIIWilliam Patalon III

By William Patalon III
Executive Editor
Money Morning/The Money Map Report

The 116 banks that are receiving billions in taxpayer-provided bailout money this year actually paid out $1.6 billion in compensation and benefits to their top executives last year – even though the results at some of these institutions were so poor that they would soon have to turn to Washington for a government-engineered rescue.

The $1.6 billion was paid out to nearly 600 executives at the 116 banks that have so far accepted federal money to bolster their financial foundations, The Associated Press concluded after a review of U.S. securities filings. In addition to salary, the compensation included bonuses paid in both cash and stock. The benefits reaped by top executives included the use of company jets for personal purposes, personal chauffeurs, home-security services, country-club memberships and professional-wealth-management services, the news service said.

U.S. Rep. Barney Frank, D-Mass., a longtime critic of the fat pay packages given to U.S. executives, said the bonuses and perks tallied by The AP review amounted to a bribe paid “to get [CEOs] to do the jobs for which they are well paid in the first place.”

“Most of us sign on to do jobs and we do them best we can," Frank, chairman of the House Financial Services committee, told the news service. But "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 is just the latest in a series of media investigations that have questioned the effectiveness of – and banks’ commitment to – the so-called “Troubled Assets Relief Program” (TARP), part of an overall $700 billion bailout plan that was originally unveiled in late September.

The plan was originally conceived to boost the strength of U.S. financial institutions by having the federal government purchase non-performing mortgages and other bad assets. In November, the Bush administration changed TARP’s objectives, instructing the U.S. Treasury Department to pump tax dollars directly into banks in a bid to prevent wholesale economic collapse.

Ideally, TARP was supposed to jumpstart bank-to-bank and bank-to-consumer lending, helping to unfreeze a credit crisis that may be the worst the U.S. economy has experienced since the Great Depression. But that hasn’t happened. Instead, as a Money Morning investigation has shown, banks are using the money to buy other banks in a dual effort to build market share for when the economy recovers, and to perhaps make themselves “too big to fail” in the interim, many experts say.

TARP did set restrictions on some executive compensation for participating banks, but it did not limit salaries and bonuses unless they had the effect of encouraging excessive risk to the institution. Banks were barred from presenting so-called “golden parachute” financial packages to departing or ousted executives and from deducting some executive pay for tax purposes.

The AP study found that the 116 banks received $188 billion in TARP money. The study also discovered that:

  • The average amount paid to each of the 116 banks' top executives was $2.6 million in salary, bonuses and benefits.
  • Lloyd C. Blankfein, president and chief executive officer of Goldman Sachs Group Inc. (GS), took home nearly $54 million in compensation in 2007. The company's top five executives received a total of $242 million. On Oct. 28, Goldman received $10 billion in federal bailout money. On Dec. 16, Goldman reported a $2.12 billion quarterly loss, its first since it went public back in 1999. So for 2008, Goldman’s seven top-paid execs will work for their base salaries of $600,000 each, but will forgo any cash and stock bonuses, the company said. Facing increasing concern by its own shareholders on executive payments, the company described its pay plan in a written report back in the spring as being 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 would not elaborate beyond that written report.
  • Even where banks slashed pay, some executives still reaped a payday of seven – or even eight – figures. Richard D. Fairbank, the chairman of Capital One Financial Corp. (COF), which received $3.56 billion in bailout money back on Nov. 14, took a $1 million hit in compensation after his company had a disappointing year, but still got $17 million in stock options.
  • Merrill Lynch & Co. (MER) CEO John A. Thain topped all banking chieftains with more than $83 million in total earnings in 2007. Thain, a former chief operating officer for Goldman Sachs, took over the top job at Merrill 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 landed a $15 million signing bonus, $57,692 in salary, and an additional $68 million in stock options. Like Goldman, Merrill got $10 billion from taxpayers on Oct. 28. Merrill shareholders have approved its sale to Bank of America Corp. (BAC), though the value of the deal has plunged to $20 billion (from $50 billion at the time the deal was announced) as a result of the stock market decline. BofA will reportedly slash 35,000 jobs as a result of the combination.
  • JPMorgan Chase & Co. (JPM) CEO James Dimon ran up a $211,182 private jet travel tab last year, because his family lived in Chicago and he was commuting to New York. JP Morgan received $25 billion in bailout funds.
  • Bank of New York Mellon Corp., (BK) CEO Robert P. Kelly received $66,748 for financial services – 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. At Goldman, the bill for leased cars and drivers ran as high as $233,000 per executive. The firm told its shareholders this year that financial counseling and chauffeurs are important because it grants executives more time to focus on their jobs.
  • Wells Fargo & Co. (WFC), which received $25 billion in bailout cash, gave its top executives as much as $20,000 each for personal financial planners.

When asked to justify the personal use of company aircraft for some executives, banks cite security as a key reason. But U.S. Rep. Brad Sherman, D-Calif., questioned that rationale, saying executives visit many locations more vulnerable than the nation's security-conscious commercial air terminals.

U.S. Rep. Brad Sherman, D-Calif., a member of the House Financial Services Committee, said excessive pay and perks undermines the development of good economic policies at banks and fuels an already problematic pay spiral in the U.S. financial sector. And that’s especially difficult for shareholders and taxpayers to accept when virtually the entire sector needs bailing out [Check out this related story on the growing U.S. CEO pay controversy that appears elsewhere in today’s issue of Money Morning].

Sherman told The AP that he wants the banks to appear before Congress, like the automakers did, and spell out their spending plans for the bailout money.

Said Sherman: "The tougher we are on the executives that come to Washington, the fewer will come for a bailout.”

[Editor’s Note: The ongoing financial crisis has changed the investing game forever, making uncertainty the norm and creating a whole set of new rules that will help determine who wins and who loses. Investors who ignore this “New Reality” will struggle, and will find their financial forays to be frustrating and unrewarding. But investors who embrace this change will not only survive – they will thrive.

Money Morning Investment Director Keith Fitz-Gerald has already isolated these new rules and has unlocked the key to what he refers to as “The Golden Age of Wealth Creation.” But Fitz-Gerald brings more than a realization – and an understanding – to the table, here. After a decade of work, he’s also developed a new computerized trading model based on a mathematical concept known as “fractals.” This system allows him to predict price movements of broad indexes, or individual stocks, with a high degree of certainty. And it’s particularly well suited to the kind of market we’re all facing right now. Check out our latest report on these new rules, and this new market environment.]

News and Related Story Links:

  • Money Morning Investigative Report:
    Billions in U.S. Bank Rescue Funds are Fueling Buyouts Worldwide – Instead of Lending at Home .

  • Wikipedia:
    Too Big To Fail Policy.

  • Yahoo! Finance:
    Study finds $1.6B went to bailed-out bank execs.

  • Wikipedia:
    Trouble Assets Relief Program (TARP).

  • Money Morning Investigative Report:
    Billions in Bank Rescue Funds are Fueling Buyout Deals, and not the Increase in Loans That Would Help Ease the Financial Crisis.

  • Money Morning Global Investing Roundups:
    Goldman Reports $2.12 Billion Quarterly Loss
    .

  • Money Morning News Analysis:
    Fed May Cut Rates Again as Policymakers Meet.

Join the conversation. Click here to jump to comments…

William Patalon IIIWilliam Patalon III

About the Author

Browse William's articles | View William's research services

Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.

… Read full bio

Login
guest
guest
22 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Mike
Mike
14 years ago

Found you guys on MarketGuru – great site!
Merry Christmas.
MM

http://www.marketguru.com/MoneyMorning

0
Reply
trackback
Jutia Group - Market Jitters & Political Critters
14 years ago

[…] William Patalon III Money Morning addthis_pub = 'jutiagroup'; addthis_logo = 'http://www.jutiagroup.com/favicon.ico'; addthis_brand […]

0
Reply
trackback
Almost one in 10 Floridians on food stamps - InterNACHI Message Board
14 years ago

[…] the worst thing we can do for the economy is to alleviate the pressure on the unemployed. Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year "Every Man Dies; Not Every Man Really Lives" ~ William Ross Wallace Pearls Before […]

0
Reply
trackback
U.S. Banks Refuse to Detail How They're Spending Federal Bailout Money
14 years ago

[…] Money Morning was one of the first news organizations to really examine how TARP money was being misdirected, and wasn't being deployed as originally intended. More recently, The AP has joined the journalistic posse and published several investigative pieces, including one that looked at executive pay at financial institutions that received bailout money. […]

0
Reply
trackback
Jutia Group - Market Jitters & Political Critters
14 years ago

[…] Money Morning was one of the first news organizations to really examine how TARP money was being misdirected, and wasn’t being deployed as originally intended. More recently, The AP has joined the journalistic posse and published several investigative pieces, including one that looked at executive pay at financial institutions that received bailout money. […]

0
Reply
trackback
January 8 - Microsoft/IBM Rumors Swirl - Jobless Claims Fall to 467,000 - Lenovo (China)/Dell (Ireland)/TDK (Japan) Layoffs - Spring Global Ends Jobs for 365 - 111 Depart at Trane - 1000 Less Jobs at Schlumberger - Layoff Outrage of the Day: Banks Offshor
14 years ago

[…] via Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year. […]

0
Reply
trackback
January 8 - Microsoft/IBM Rumors Swirl - Jobless Claims Fall to 467,000 - Lenovo (China)/Dell (Ireland)/TDK (Japan) Layoffs - Spring Global Ends Jobs for 365 - 111 Depart at Trane - 1000 Less Jobs at Schlumberger - Layoff Outrage of the Day: Banks Offshor
14 years ago

[…] via Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year. […]

0
Reply
trackback
I misplaced $350 Billion, can you help me find it? - Coldstreams Business and Economy
14 years ago

[…] Risk suggests one place the TARP money is going … while others suggest its being used to pay bonuses to executives who drove their firms into the ground […]

0
Reply
Sandy
Sandy
14 years ago

From a Canadian view: Americans seem to be very me,me,me and how can you expect your government to be any different! We would be rioting in the streets up here and setting fire to the homes of the rich to make a statement as opposed to complaining 24/7 as guess what, the government has no qualms about putting your money in their pockets while listening to you whine about it , would you?? come on up to Canada at least our governement gives us the finger behind our back not in front of our faces. Voting Bush in a second term makes me wonder if this nightmare is not deserved somewhat!

0
Reply
Ruby Schwanke
Ruby Schwanke
14 years ago

Our Government Leaders are doing a great job at Banrupting our country by feeding money to the rich who only feed their own pockets. Where are the Leaders of Our Country and What has happened to Working for the Better of America? As long as everyone can fill their own pockets – they don't care about America or American Taxpayers.

0
Reply
trackback
Jutia Group - Market Jitters & Political Critters
14 years ago

[…] Morning has detailed how banks have used the first $350 billion: They’ve used the capital to finance investments in other banks – including an investment in China – and to pay bonuses to executives. […]

0
Reply
trackback
Congressional Watchdog Criticizes Treasury for Failing to Track $350 Billion in Bank Bailout Money
14 years ago

[…] Morning has detailed how banks have used the first $350 billion: They’ve used the capital to finance investments in other banks – including an investment in China – and to pay bonuses to executives. […]

0
Reply
trackback
Obama Requests Release of Second Half of $350 Billion TARP
14 years ago

[…] Morning has detailed how banks have used the first $350 billion: They've used the capital to finance investments in other banks – including an investment in China – and to pay bonuses to executives. Then they […]

0
Reply
trackback
Jim Rogers: $700 Billion Banking Bailout is ‘Horrible Economics’
14 years ago

[…] You can continue to use your balance sheet that is phony " All these guys are bankrupt, they're still worrying about their bonuses, they're still trying to pay their dividends, and the whole system is […]

0
Reply
trackback
the Stimulus - Nissan Titan Forum
14 years ago

[…] Re: the Stimulus In the absence of further details, none of the foregoing "pork" bothers me much. (except maybe Amtrak) It really bothers me that financial institutions that received $188 billion in bailout money paid $1.6 billion in compensation to 600 executives. That averages to $2,666,666 per incompetent executive. In actuality, some of most incompetent execs received much more. Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year […]

0
Reply
trackback
Obama Administration Must Revive "Shadow Financial System" to Revive U.S. Banks
14 years ago

[…] Money Morning Investigative Report on the Bank Bailouts (Part IV): Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year. […]

0
Reply
trackback
The New Banking Bailout Plan Reconstitutes Some of the Same Ingredients That Touched Off the Financial Crisis
14 years ago

[…] to make direct investments in troubled banks. Worse than being merely ineffective, it enabled banks to pay bonuses and finance buyouts – instead of increasing lending, as the government intended. Worst of all: […]

0
Reply
trackback
Wall Street's Bonus System Was a Major Financial Crisis Catalyst
14 years ago

[…] make her point, McCaskill cited a report (also carried by Money Morning) stating that executives at 116 banks that got government bailout funds were paid an average of $2.6 million in bo…. She condemned Citigroup Inc. (C) last week for even considering taking delivery of a $50 million […]

0
Reply
trackback
As Big Banks are Criticized for not Lending, Small Banks Find They Can’t Lend
14 years ago

[…] Money Morning Investigative Report on the Bank Bailouts (Part IV): Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year. […]

0
Reply
trackback
The New Banking Bailout Plan Reconstitutes Some of the Same Ingredients That Touched Off the Financial Crisis
13 years ago

[…] to make direct investments in troubled banks. Worse than being merely ineffective, it enabled banks to pay bonuses and finance buyouts – instead of increasing lending, as the government intended. Worst of […]

0
Reply
trackback
Obama’s New Stimulus Plan May Be the Needle That Pops the Treasury-Bond Bubble
13 years ago

[…] Money Morning Investigative Report on the Bank Bailouts (Part IV): Banks That Got $188 Billion in Bailout Money This Year Paid Out $1.6 Billion to Top Execs Last Year. […]

0
Reply
Agent Nadia
Agent Nadia
11 years ago

I don't understand why these bail outs did not have any contingencies where the money could only be for balancing the company budget and not for employee compensations. Sad to see hard working people's money is being taken away from them by CEO's by using it to pay their own pockets instead of helping their own company and paying it back.

0
Reply
LIVE
Visit Money Morning Live


Latest News

March 29, 2023 • By Chris Johnson

Commercial Real Estate is Feeling the Aftershocks of the Financial Crisis

March 29, 2023 • By Kenny Glick

Here's How You Can Find a New Trade If You Just Missed Your Entry

March 29, 2023 • By Garrett Baldwin

It's Not You... It's the Market
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover This Is VWAP Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Warlock's World Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Flashpoint Trader Darknet Hyper Momentum Trader Alpha Accelerators Weekly Profit Cycles Brutus Alerts

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information

wpDiscuz