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White House special master for compensation Kenneth Feinberg brought the hammer down on exiting Bank of America CEO Ken Lewis today, clawing back his salary and bonus for 2009. He still is on track to collect a $53.2 million dollar pension when he leaves the CEO position, so he’s not exactly going to miss a bill payment based on this decision.
I’m assuming that Feinberg based his decision on pay by tying it to Bank of America’s performance, having lost $1 billion last quarter. With the US government among the biggest investors in the bank at this point, it stands to reason that the CEO shouldn’t exactly be rewarded for this output and the top investor should have some say on what is done with public money.
Both BofA and Citigroup experienced big losses in Q3, prompting this wry comment from Paul Krugman:
Um, weren’t we being assured that recapitalization by the government — which would probably require temporary nationalization — was unnecessary, because the banks could earn their way back to adequate capital ratios?
In fact, banks aren’t earning from their core banking duties, but like Goldman Sachs, are profiting off of more gambling and risk-taking and acting like hedge funds largely with borrowed money. Meanwhile a Goldman Sachs employee has been hired as the lead enforcement officer at the Securities and Exchange Commission.
So it goes.
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Same reason FDR hired Joseph Kennedy to invent the SEC: hiring a fox scares the other foxes who hunt hens, only a criminal knows how the crimes get committed.
Not sure if it’s true now or was true then, but that’s the argument for hiring this youngster, I am quite sure.
A fox puppy in this case, not a fox. At 29, with five years experience, all of it at Goldman, all of it deals and not lawyering, Adam Storch won’t be catching or scaring anything.
Had the SEC hired a young clone of Barofsky or Elizabeth Warren or Patrick Fitzgerald, the other foxes would be worried. With this hire, the only thing the foxes will be frightened of is that after Goldman finishes with the henhouse, there won’t be anything left for them.
David, thanks for this article, too. Is it possible that Feinberg could manage a “clawback” of taxpayers’ dollars that Goldman Sachs has used to make gazillions? Just watched the video of Ratigan donning magician’s attire and explaining Goldman Sachs’ enormous profit at our expense (video here, for those who might not have seen it). What an outrage.