Oct. 23, 2008 -- Fear that Wall Street firms receiving billions of taxpayer dollars in aid might still go ahead with hefty executive bonuses has led one U.S. congressman to start investigating compensation packages.
Rep. Dennis Kucinich, D-Ohio, who is chairman of the Domestic Policy subcommittee of the House Committee on Oversight and Government Reform, said he plans to ask banks and brokerages to detail their employee pay packages.
Kucinich voted against the $700 billion bailout package, saying that he "had great suspicions" that the money wouldn't help stop the flood of foreclosures. Reining in excessive executive compensation was promised as part of the bailout plan. Now it appears, Kucinich said, that such promises aren't coming true and that some firms might even be using the cash from the federal bailout to reward employees.
"That raises questions about the legitimacy of the bailout and we really need to find out how widespread this is," he told ABC News today.
Kucinich's concerns stem from a recent report by London's The Guardian that more than $70 billion in bonuses might be paid out by Wall Street banks this year. The firms named by the British paper include Citigroup, Goldman Sachs and Morgan Stanley.
"This is a disgrace," Kucinich said, adding that some additional congressional action may be warranted. "The bailout continues to be perverted by those who led us into the problem to begin with and who stand not to just profit in a corporate sense but to profit personally through bonus packages."
Kucinich does not have confirmation of The Guardian's report but hopes to get some answers.
"No one is denying that this is happening," he said. "That AIG took action confirms that it's happening. We just have to see the extent of it."
New York Attorney General Andrew Cuomo yesterday announced that AIG had agreed to freeze $19 million in compensation for its former chief executive and another $600 million that was set aside for other executives.
The New York-based insurer has sought more than $120 billion in aid from the Federal Reserve so far.
"We really have to get a grip on this," Kucinich said. "This is something that homeowners must find intolerable as they are struggling to pay their mortgages."
Kucinich said it could be some time before his staff gets the requested information -- if it gets what it seeks -- and gets a clear picture of what exactly is going on inside these firms.
"We need to go deeply into this financial crisis," he added, "find out to the extent there's been criminal misconduct, hold people accountable and change the way that we regulate these concerns."