Banks paid big $ to execs during crisis

By David Ellis, staff writer


NEW YORK (CNNMoney.com) -- Even during the darkest days of the financial crisis, nearly twenty financial firms managed to shell out an estimated $1.6 billion in "ill-advised" payments to their executives, according to a federal report issued Friday.

In his latest review of compensation practices at companies that were bailed out by American taxpayers, White House pay czar Kenneth Feinberg condemned those companies for how they rewarded employees between late 2008 and early 2009.

"These 17 exercised poor judgment," said Feinberg. "They shouldn't have made these payments."

The review was part of a previously-announced effort to shed light on whether any of the early recipients of funds under the Troubled Asset Relief Program, or TARP, made excessive payments to employees before Congress passed legislation in February of 2009 requiring greater oversight at bailed-out firms.

Those implicated in Friday's report included some of the biggest recipients of taxpayer aid. Wall Street investment houses like Morgan Stanley (MS, Fortune 500) and Goldman Sachs (GS, Fortune 500) were both cited as firms that made excessive payments to executives. More traditional lenders like PNC (PNC, Fortune 500) and Buffalo, NY-based M&T Bank (MTB) were included on the list, as was the troubled insurance giant AIG (AIG, Fortune 500) and small-business lender CIT Group (CIT).

Spokespeople for several of the 17 companies either declined to comment or were not immediately available.

But others said they supported Feinberg's efforts to reform compensation practices and said they planned to review the proposal.

"Getting our compensation structure right is a priority for us," said a statement issued by a spokesman for Citigroup (C, Fortune 500), which also made the list.

More than 400 companies underwent review, although less than half of that number actually warranted a closer look because their executives made less than $500,000. That was the cutoff point that was established when the program was announced last March.

Despite the breadth of the study, it offered few details about the size of payouts made by individual firms, or how much specific executives were paid -- although Feinberg said that several people received more than $10 million during that period.

In a briefing with reporters in Washington Friday, Feinberg said the payouts were "not illegal" and not "contrary to the public interest." He added that he did not have the power to force companies to claw back those payments to employees.

"His mandate was very limited," said Alan Levine, an executive compensation and benefits partner with the New York-based law firm Morrison Cohen.

Feinberg did however, encourage the 17 firms to adopt new rules that would allow them to restructure or cancel pay packages in the event of another financial crisis.

"That's all I can do," he said. Friday's report represents the latest, and perhaps the last, ruling by Washington's pay czar.

Last October, Feinberg slashed pay for top executives at the seven companies that were rescued more than once by the federal government -- AIG (AIG, Fortune 500), Citigroup (C, Fortune 500) , Bank of America (BAC, Fortune 500), General Motors, GMAC, Chrysler and Chrysler Financial.

Two months later, he capped salaries for lower-level executives at those same firms at $500,000. Both rulings served as a benchmark for employee pay levels in 2010.

His role at the Treasury Department however is expected to quickly come to a close. He was recently appointed to handle claims related to the BP (BP) oil spill. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,408.54 -16.31 -0.10%
Nasdaq 4,095.52 9.29 0.23%
S&P 500 1,864.85 2.54 0.14%
Treasuries 2.72 0.08 3.19%
Data as of 9:15pm ET
Company Price Change % Change
Bank of America Corp... 16.15 0.00 0.00%
Facebook Inc 58.94 0.00 0.00%
General Electric Co 26.56 0.00 0.00%
Cisco Systems Inc 23.21 0.00 0.00%
Micron Technology In... 23.91 0.00 0.00%
Data as of Apr 17
Sponsors

Sections

General Mills has scrapped a controversial change to its fine print that some read as eliminating customers' right to sue the company. More

Obamacare sign ups hit 8 million, though final enrollment remains to be seen. More

Office for iPad move is a symbolic victory for Nadella's Microsoft, but the company is still weighed down by many of the same old issues. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

As Detroit moves closer to reaching a bankruptcy deal, retired civilian workers are poised to be left worse off than firemen and police officers. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.