Ed Brayton is a journalist, commentator and speaker. He is the co-founder and president of 
The Associated Press did a review of financial records and found that 116 banks that have received bailout money from the TARP fund paid huge salaries to their top executives last year even while declaring themselves poor and on the verge of collapse.
Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay 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.
Some highlights, like the CEO of Goldman Sachs, which has so far received $10 billion in taxpayer dollars this year:
Lloyd Blankfein, president and chief executive officer 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 will forgo cash and stock bonuses for its seven top-paid executives. They will work for their base salaries of $600,000, the company said. Facing increasing concern by its own shareholders on executive payments, the company described its pay plan last spring 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."
You mean you couldn't find someone who would bankrupt the company for only, say, $10 million? Hell, I'd run the company into the ground for a mere $500,000. Just ask me. Where exactly are those "efforts and judgments" that were "vital to their continued success" while they were failing? And is it just a coincidence that the man who put the bailout plan together used to hold the same position Blankfein now does and got paid similar amounts of money?
John A. Thain, chief executive officer of Merrill Lynch, topped all corporate bank bosses with $83 million in earnings last year. Thain, a former chief operating officer for Goldman Sachs, took the reins of the company 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.
Merrill Lynch also got $10 billion in taxpayer money. Hell, give me a million bucks and I'll ruin both companies at once. Really, it's no trouble.
Politics
Comments
I've LOVE to see those execs go through the "performance review" like their employees have to.
Someone call up Bob & Bob.
Posted by: MarkusR | December 22, 2008 9:51 AM
News of this character has been turning up at corporate watchdog radio, bailout watch, calculated risk, and any number of other blogs since November.
All my life I've been told from all sides that the business world enforces competence, that the rich deserve to be rich because they earned it, that the poor deserve to be poor, because if they didn't want to be, they should just get off their asses and go be entrepreneurs or investors or businessmen. Most importantly, I've been told over and over and over and over and over again, the poor don't deserve any taxpayer dollars.
Now we've seen where that kind of theology leads us. Of course we could have learned it from any decent history of the gilded age, or of the great depression, but history is booooooooring.
Posted by: llewelly | December 22, 2008 10:24 AM
It appears that quality of performance is inversely proportional to the money they are paid. You get what you pay for. I come a lot cheaper than Ed. I would run these companies into the ground for half what Ed is asking. Of course, if forced to, I would reluctantly accept Thain's $83M.
Posted by: Hal in Howell MI | December 22, 2008 10:45 AM
I bet you would do a better job for less money. After all, you can probably balance your checkbook and you are a poker player. I predict that there will be a bunch of shareholder lawsuits naming the execs as co-defendants in the next few years.
Posted by: c-serpent | December 22, 2008 10:51 AM
c-serpent:
Sorry to have to tell you this: The honchos of those 116 banks and some others, as well as the CEO's of the big three (and if they hurry, the telecoms) are all on the list of the UOEP (Unconditional Open Ended Pardonapalooza) planned for 1/19/09.
Posted by: democommie | December 22, 2008 11:25 AM
It could be worse, had we not bailed them out and provided these wonderful golden parachutes, the economy might have collapsed ... oh, wait...
Posted by: dogmeatib | December 22, 2008 11:35 AM
Democommie - I know your comment was at least somewhat facetious. But it raises an interesting question - would a pardon immunize them from civil suits? I know being found innocent didn't do O.J. any good financially...
Posted by: BobApril | December 22, 2008 11:57 AM
I have lived in Japan for 35 years. Although our politicians get a lot of international attention for their verbal gaffes, (hey, they are mostly 2nd and 3rd generation silver spoon types, they have no clue how the rest of live) among the Corporate elite here there is a strong sense of responsibility.
Japan Airlines is seriously in the red. So the President cuts his pay to less than his pilot's pay, commutes to work by bus, and eats in the employee cafeteria. And the JAL Presidents pay was never at stratospheric heights to begin with.
http://edgehopper.com/what-united-airlines-could-learn-from-jal/
How about that Detroit and New York?
Posted by: Max von Schuler-Kobayashi | December 22, 2008 12:10 PM
At the risk of sounding like a conspiracy-theory wacko,
it looks like a massive transfer of wealth (A/K/A looting)
has been going on for a few decades now; first the dot com
bubble, then the real estate run-up, now this crisis among
financial institutions. On the bright side, at least it is easier than ever to be poor but honest.
Posted by: conelrad | December 22, 2008 12:21 PM
-King Arthur, speaking in A Connecticut Yankee in King Arthur's Court
Our modern American CEO culture is simply a new version of the same old "divine right of kings" bullshit that saddled Western society with rule by titled sheep-wits for centuries.
It's about time for some enterprising engineer to invent something more spectacular than the guillotine to accomodate these shitbags.
Posted by: Ktesibios | December 22, 2008 12:37 PM
Surely these executives deserve a slice of the bailout money they have finagled to the banks. Without all that money the banks might have gone bankcrupt!
Posted by: Lassi Hippeläinen | December 22, 2008 12:49 PM
Dennis Moore: Wait a tic... blimey, this redistribution of wealth is trickier than I thought.
Posted by: ebina2 | December 22, 2008 2:26 PM
Ed, you have lost the critical eye that you used to have. Your blog looks like it is written by a hack trying to score political points. The article talks mostly about the 2007 compensation of the CEOs. In 2007, which ended almost a year ago, most financial institutions were still doing pretty well.
Remember, you can't take back money you've already paid your employees. Furthermore, you can't take back things that the AP counted the value of in its calculations, like "personal use of company jets and chauffeurs".
Look at the second paragraph:
"The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages."
So, how many people foresaw the coming economic crisis early enough in 2007 to scale back executive compensation enough to make the total 2007 compensation look appropriate to you? Even if a bank's board realized in June 2007 that things were bad and cut the compensation to $0, they would still have made millions in the first half of the year.
Posted by: delurking | December 22, 2008 4:21 PM
You know, I've never understood how this UOEP thing works. I've not understood it since Gerald Ford pardoned Nixon - for things Nixon hadn't even been accused of yet in a court of law, much less convicted and sentenced.
This "pardon for something that hasn't even been proven yet" idea is completely baffling to me. The Scooter Libby pardon? That's legit, even if it's a grievous abuse of the power. But the whole idea of a "pardon" is to excuse the recipient for a crime for which they were convicted. If one hasn't been convicted of a crime, then one is presumed innocent under the Constitution. How can a person who is legally defined as innocent be "pardoned" for anything?
IOW, this whole idea of "preemptive pardons" for crimes that have not even been proven in court to have happened is unconstitutional. I'd love to see what the SCOTUS would say about that.
If UOEPs were declared unconstitutional, it would correct a lot of the abuse, and remove the cover up factor. Sure, pardon Dick Nixon, but only after Dick Nixon has been arrested, tried and convicted in open court by a jury of peers. Then you can pardon him and spare him the indignity of being a former President in jail. But not until the truth comes out.
Posted by: Joe Max | December 22, 2008 4:47 PM
Posted by: llewelly | December 22, 2008 5:08 PM
"Ed, you have lost the critical eye that you used to have. Your blog looks like it is written by a hack trying to score political points. The article talks mostly about the 2007 compensation of the CEOs. In 2007, which ended almost a year ago, most financial institutions were still doing pretty well."
Next you'll be pointing out that that $1.6 billion spread between 116 banks works out to around $15 million per bank - and that each bank then split that compensation between probably 5-10 (or more) executives.
Oh and I wonder what happened to the value of their stock options and stock grants in the past year?
Posted by: Ian Gould | December 22, 2008 6:15 PM
Claptrap. They were driving their companies into ruin long before January 2008. The cause of their collapse was not something that happened overnight.
If, say, the IBM CEO had used unsustainable business practices to reap massive profits one year only to see the company on the edge of ruin the very next year, then nobody would be arguing that he deserved a $50 million bonus the year before. He'd be lucky to escape being tarred and feathered on his way out the door. Why should it be any different for these financial companies?
Posted by: tacitus | December 22, 2008 7:49 PM
"If we do that, the communists will surely win, and Joseph Stalin and Chairman Mao will sit in the White House! "
Ewww. Then noone would want to visit. That would be stinky! Though maybe a couple of stiffs could manage better than some of the live guys we've had.
"The article talks mostly about the 2007 compensation of the CEOs. In 2007, which ended almost a year ago, most financial institutions were still doing pretty well."
Yeah, if those guys did not see the writing on the wall by the end of '07, they really didn't deserve to be in the job, let alone get a big bonus.
But the real crime is that these guys are going to give themselves and their staff bonuses this year, which basically we're paying for. It's been estimated that Wall Street bonuses will "only" be 50 percent of last year's (and remember that a lot of people besides "top executives" get fat bonuses), because that's what you deserve when you blow the entire industry's profits going back five years or more. I guess. So the minions of Wall Street will likely be pocketing $15-20 billion, courtesy of Uncle Hank.
Posted by: Moopheus | December 22, 2008 10:14 PM
So Morpheus and Tacitus how much money did you make short-selling financial company shares over the past year?
I ask because you both assure us that the events of the past year were entirely predictable.
Posted by: Ian Gould | December 23, 2008 2:28 AM
Ian, utterly irrelevant. I am not an insider nor a financial expert, and its ludicrous to insinuate that just because I didn't predict the collapse then the seeds for that collapse were not being sewn well before 2008 began.
Posted by: tacitus | December 23, 2008 4:54 AM
Ian Gould:
I think that executive compensation, in general, is pretty fucking ridiculous. People that get paid huge amounts of money for quarter over quarter or year over year "gains" are going to do anything they can (if they're typical humans) to reap the largest personal benefit that they are able to. Offshoring, downsizing, merging of companies with incompatible corporate cultures/product offerings is rampant in the economy that is now in motion, globally. The boards of directors of many large firms are composed of the CEO's of other large firms. The New Robber Barons have enriched themselves at the expense of the average worker and the consumer. Fuck them.
Posted by: democommie | December 23, 2008 8:34 AM
Democommie, I agree that executive compensation, especially in the US, is generally excessive.
I don't agree with the proposal that finance executives' payments for 2007 should have been determined by events in 2008.
Posted by: Ian Gould | December 23, 2008 8:39 AM
Ian Gould:
I agree with you on that. I also agree with other commenters who could see, without the benefit of a Wharton School education that the economy was going south for at least the last two or three years. If any of the TEO's (yes, T, as in Thief) had an ounce of moral fiber they would simply write a check for whatever was in their bloated bank accounts and work for the wages of their highest paid blue collar stiff for a year to see what it's like. Fat chance of that ever happening.
Posted by: democommie | December 23, 2008 9:19 AM
Tacitus, are you really proposing that corporations should be allowed to take back compensation that has already been paid? The idea is ridiculous.
I repeat the question with which I ended my post: how many experts were predicting this financial mess early enough in 2007 for corporate directors to cut the total 2007 compensation of their executives to level you approve of?
Posted by: delurking | December 23, 2008 10:13 AM
To point out some specifics, Goldman Sachs leads off the article. Goldman Sachs is one of the few banks that flipped its position and sold subprime-backed bonds short, making piles of money in the 3rd quarter of 2007. So do their executives deserve their 2007 compensation through the third quarter, or is their performance irrelevant?
Or, is anyone going to claim not just that it was obvious that the sub-prime mortgage-backed bond market was overvalued, but that it was obvious that it was overvalued enough to cause worldwide economic bank problems?
Posted by: delurking | December 23, 2008 10:33 AM
delurking:
Those of us who are not a.) economists or b.) CEO's of Wallstreet firms can only guess at the answers to those questions. However, the guesses are informed. The sub-prime lending crisis did not develop in a vacuum. The people at the top knew (or are too stupid to be there if they didn't) that the economy was a mess. It didn't slow them down in any observable way. As a contrast to what you're asking: How much sympathy are we seeing for the Not So Big Three these days? Not a lot, right? It's because everyone says they knew what was going on and ignored the warning signs. I hardly see the bankers and securities folks being in any different position. They are supposedly trained and experienced professionals, a supposition that seems, at this point, erroneous.
Posted by: democommie | December 23, 2008 10:40 AM
democommie,
I am not an economist either. I also have no sympathy for the banks. I was in favor of letting them all go down. If we felt that a stimulus was needed, we should have just distributed the trillions of dollars directly to the people (ie everyone), who could then choose how best to allocate it. There are lots of medium and small banks that did not get involved in the subprime market at all, and in my opinion they would have risen up to replace the failed big banks. Again, though, I am not an economist. I have no good way of evaluating the argument that the time lag involved would have bankrupted many non-financial businesses, but it strikes me as unlikely given the speed with which other business developments happen.
Nevertheless, my criticism of the original post stands. Many people lost lots of money in the .com crash too. It is a characteristic of economic bubbles that people lose money when they burst. It is a good feature of markets that we can't go back and take the earnings away from those people who exited the markets before the decline (or were employed by the .coms or banks before they crashed). Imagine the economic disincentives if we could.
Posted by: delurking | December 23, 2008 1:11 PM
delurking:
I'm with you up to the point of the people not being aware of the problems and either a.) ignoring them, or b.) simply lying about them. In the current situation with the banks and investment houses, people like you and I KNEW in our guts that the whole thing was a bullshit construct but the people who were in charge are claiming ignorance and worse, that a lot of the current mess was unprecedented and unforeseeable. That's absolute horseshit and you and I both know it.
I have no expectation of my point of view being seen as right. Of course I did not have any money in play so I didn't lose any. That is vindication of a sort.
Posted by: democommie | December 25, 2008 11:05 AM