Tags: ken feinberg | banks

US Pay Czar to Slam Banks on Bonuses

Friday, 23 Jul 2010 09:17 AM

The Treasury Department's pay czar is preparing to criticize Wall Street banks that paid their executives lavishly after receiving taxpayer bailouts.

Kenneth Feinberg on Friday will disclose a list of banks that made payouts he has determined were inappropriate. Wall Street titans including JPMorgan Chase & Co. used poor judgment in paying executives as the global financial system unraveled, Feinberg will say, according to two people familiar with the plans. The people spoke on condition of anonymity because they were not authorized to discuss the matter.

Feinberg has been reviewing pay at all 419 companies that took bailout money before pay curbs were enacted in February 2009. The bailouts started in October 2008 as the financial system teetered amid fears about the plummeting value of mortgage investments.

Feinberg can't force the banks to return the money. Most of the banks on the list have already repaid the government.

A JPMorgan spokeswoman declined to comment.

Until now, Feinberg's authority was limited to the seven companies that took the biggest bailouts: Citigroup Inc., Bank of America Corp., American International Group Inc., General Motors, GMAC, Chrysler and Chrysler financial.

His influence shrank as some companies repaid enough bailout money to escape his oversight.

Friday's announcement comes as Wall Street's most powerful banks face a raft of new regulations signed into law this week. One provision gives shareholders a chance to vote on proposed pay for executives of public companies. The votes won't be binding.

Separately, the Federal Reserve recently started monitoring pay at banks more closely. The goal is to prevent executives from reaping huge payouts if their decisions cause long-term losses for their companies.

Feinberg's clout in Washington grew this summer after he was appointed to administer the $20 billion fund set up by BP to compensate victims of the oil spill in the Gulf of Mexico.

Friday's review is likely to be Feinberg's final act before he leaves Treasury to focus full-time on the BP fund.

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