Unfair to force 17 firms to return $1.7B in ‘ill-advised’ bonuses: pay czar
Seventeen US financial firms paid 1.7 billion dollars in “ill-advised” bonuses to top executives at the height of the financial crisis, President Barack Obama’s pay czar said Friday.
The firms, including top Wall Street banks Goldman Sachs, J.P. Morgan Chase and Citigroup, made the excessive salary and bonus payments while receiving public bailout money during the October 2008-February 2009 period, said Kenneth Feinberg, the administration’s special master for compensation.
The firms did nothing illegal as rules at that time allowed these kinds of payments, but the decision reflects “bad judgment,” Feinberg said.
“It was ill-advised. This wasn’t illegal,” he said. “They violated no” rules but this was “bad judgment,” he added.
Among the other firms that made the ‘ill-advised” payments were insurance giant AIG, Morgan Stanley, Bank of New York Mellon and Wells Fargo.
Most of the firms cited had already repaid the taxpayers.
The Wall Street Journal reports that Feinberg “declined to request 17 financial firms that doled out $1.6 billion in ‘ill advised’ executive compensation to return the excessive payouts, saying to do so would be unfair to the companies and could trigger private lawsuits and additional Congressional investigation.”
Feinberg, who is moving onto handling claims related to the BP (BP) oil spill, said he would not seek to recoup those funds.
Rather, he proposed those firms adopt new rules that would allow them to restructure or cancel pay packages in the event of another financial crisis.
The AP notes, “President Barack Obama says new revelations of big bank bonuses underscore the need for the financial regulation bill he signed into law this week.”
(with additional reporting by Raw Story)