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
"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:
• 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
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
• 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 Assets 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
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.
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.
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.
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.