Wall Street bankers are still raking in billions in bonuses

The bill doesn't place any caps on pay. Rather, it requires that shareholders vote on compensation of senior executives. That's because, as Frank notes, the amount of compensation at banks is not "a public decision, rather it's up to shareholders." However, the votes are non-binding, and boards of directors at the companies can choose to ignore them. At least one prominent shareholder is already saying that it would be impossible for it to be effective.

The pension fund of The United Brotherhood of Carpenters and Joiners of America has assets of $40 billion and holds shares of 3,603 companies. Douglas McCarron, the fund's president, says it would be a "challenge" to undertake a level of research and analysis required to vote on the pay plans of all the companies in which it owns shares. He says the fund might end up voting at thousands of the companies it invests in based on a simple checklist.

"Such an action will undermine the goals that motivated the work to improve compensation disclosure," says McCarron, in a letter to the SEC.

Opponents of the bill say there are a lot of unanswered questions that they hope the Senate will address when it debates the legislation. "Part of the problem is that I don't recall any expert testimony on any of the pieces of the bill, nor have we held any hearings on compensation specifically," Rep. Scott Garrett, R-N.J., says.

Bankers win no matter what happens

It's also unclear how, exactly, banks that still have TARP funds will see their compensation affected. The government has appointed Kenneth Feinberg as pay czar to monitor pay at banks and auto companies that have not repaid government bailout money, and he has yet to publicly take any action.

The Treasury has proposed that executives at these firms get no bonuses or retention and incentive awards, and in some cases they might even have to pay back past bonuses. Seven companies have until Thursday to submit proposed compensation details for the 100 highest-paid employees within the firms. While Feinberg has the power to make sure pay doesn't reward risky behavior and to even take back pay that was undeserved, it is unclear what he will do with the information.

"Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance," says Treasury spokeswoman Meg Reilly. "Obviously, we all have a shared interest in ensuring that those companies can return to profitability as soon as possible so that taxpayers can recoup their investment."

But neither Feinberg's appointment nor the bill that awaits the Senate addresses the fundamental problem that fueled the anger, which is that traders and executives at these firms end up winning both ways. As Cuomo said in his report, Wall Street compensation is a proposition in which "heads I win, tails you lose."

Most of the biggest banks declined to comment. But at Goldman Sachs, "The correlation between our net revenue and compensation has been 99% since the firm went public in 1999," says spokesman Lucas Van Praag. "This is hard proof that pay is directly linked to performance."

Criticism is focused on more than the industry's big players. An Aug. 4 report from compensation consultants Presidio Pay Advisors analyzed 115 banks that received TARP funds. The report, like Cuomo's, found no correlation between pay and performance at the banks in the last three years.

"Wall Street's economic well-being is totally based on taxpayers' money saving them from disaster, and they've already forgotten that," says Stephen Lerner, who directs the financial-reform campaign at union group SEIU. "Americans lost trillions of dollars in wealth from the economic collapse, and while Wall Street got bailed out, it will take years for workers on Main Street to get jobs and work their way out of this economic catastrophe."

Contributing: Matt Krantz

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