Posted on 26 Jul 2010
Pay czar Kenneth Feinberg used his well-known eye for fairness in blasting Wall Street for handing out excessive bonuses in the midst of the financial crisis, then took the only step he could.
Without direct compensation reform as part of Dodd-Frank, Feinberg on Friday offered something to fill the void: end the guaranteed compensation system on Wall Street in a time of financial crisis and give boards ultimate power to reduce or restructure compensation contracts.
His suggested targets are the 17 firms cited in the same report. They doled out $1.58 billion in bonuses when U.S. taxpayers fronted the financial industry hundreds of billions to shore up the system. Feinberg, the Obama administration's special master for compensation, assessed that 80% of the payouts were unwarranted. Read full story on Feinberg's findings.
Not surprisingly, Wall Street's biggest names reportedly are among those found guilty of excessive payments including American International Group Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Citigroup Inc. AIG is still on the hook for more than $100 billion to taxpayers and Citi took $40 billion -- half of the bank bailout commitment, not including guarantees -- and still owes $11.63 billion. Feinberg did not publicly release firm names as part of the report.
Feinberg is on his way out and his office has been quick to point out he has no legal authority to recoup payments not covered by his role as pay czar. Feinberg was only supposed to approve compensation among bailed-out firms in 2009, or until they paid back the government. His criticism covers the period in late 2008, before his job was created.
Eleven of the 17 banks have repaid their allocations under the Troubled Asset Relief Program.
Feinberg's hands are tied. He took over after the horses had left the barn. He can't even close the gate. Banks will have to do it on their own. Good luck with that.