Pay Czar Ken Feinberg vs. Wall Street Bonuses

Today, Pay Czar Kenneth Feinberg disclosed some information: Certain top Wall Street execs, while their 17 banks were on the TARP (aka federal, aka citizen-sponsored, payroll) awarded themselves nearly $1.6 billion in bonuses in 2008, 80% of which would have been unwarranted under pay guidelines established in February, 2009  for TARP awardees. Though, he's not going to ask for that money back (hey, it was the federal government's fault that it bailed out these banks and forgot to tell their execs not to use that money for bonus payments ) he now says this kind of thing is less likely to happen in the future because:

"If the company's board of directors has identified that the firm is in a crisis situation, the compensation committee would have the authority to restructure, reduce or cancel pending payments to executives."

Earth to Feinberg: The board of directors is chosen by the company leaders - aka the execs who get paid the big bucks - they don't usually keep those comfy board positions if they go around saying their firm's in crisis, or that the guys that gave them their board seats are overpaid.

Separately, that $1.6 billion number is nothing if you consider the total compensation paid out by just the top 6 banks in 2009. While floating on various federal subsidies, including (BUT - and this is a key thing no one in Washington wants to get - NOT LIMITED TO) TARP, Fed guarantees and loan facilities, FDIC debt guarantees, and general cheap funding: the top 6 banks paid out $124 billion in total compensation, while still enjoying $115 billion in active subsidies. Check it out in my reports. Tell that to the board.

And, by the way, none of this is addressed sufficiently in the financial 'reform' bill.

Ten Reasons the Goldman Settlement Hurts Us

I did a segment about this on Dylan Ratigan's show earlier today: 

1) The fine of $550 million is a drop in the bucket for Goldman. It's about 4% of the $12.9 billion it received from the Federal Government through AIG. (which is only part of the largesse the firm enjoyed courtesy of our government (see my bailout reports.)) It's equivalent to less than $1500 of an average person's salary.

2) Contrary to popular media stories, $550 million is NOT the largest settlement for a Wall Street securities firm we are expected to believe it is, the $650 million settlement with Drexel Burnham Lambert in 1988 was (not to mention the $600 million settlement with Michael Milken bringing that tally to $1.2 billion.) 

3) The settlement went along party lines. It was the two Republicans who voted against settling - probably because it involved money, but it's nicer to think it's because it involved no confirming or denying any wrongdoing, and the shutting down of future potential investigations and charges. The Democrats voted for it because they thought it was actually meaningful, or wanting to convey that it was. Not sure which is worse.

4) Mary Shapiro, the Obama SEC head appointee who agreed to a mere $33 million dollar fine on Bank of America's behavior when Ben Bernanke and Hank Paulson pushed its merger with Merill, that was subsequently overturned in courts because it was ridiculous, cast the deciding vote. Way to go, Mary.

5) It took just half an hour to gain approval - that's a fraction of the time it would take to reach a settlement for a marijuana case. All that shows is how absolutely, disgustingly biased against people our justice system is. 

6) The settlement closes the possibility of further investigations into any of Goldman's other deals. It closes the possibility of further investigations into similar deals at other firms that participated in the toxic asset shuffle.

7) It validates Tim Geithner's saving of AIG with its backdoor benefit to Goldman and others. (Because of the above, the CDO business remains impervious to investigation or change. If Goldman had been found to have made more than  'a mistake', we might have circled back to the relationship between AIG and Goldman, or AIG and other firms, regarding CDOs, which might have made Tefflon Timmy look bad. 

8) It validates the closing of the investigation of AIG by the Department of Justice and the SEC two months ago, showing that not only do we have weak regulators, we have a misguided justice department.

9) The timing coming so close after the announcement of the Senate's approval of the so-called sweeping financial reform package was meant by the SEC (and Obama administration) to show its power and effectiveness, but instead, it showed its complete capitulation to Wall Street. Along with the toothless reform package, the settlement solidifies the status quo on Wall Street.

10) It confirms the fact that our regulators have no interest in examining the types of deals that were central to the financial markets and credit meltdown, anymore.

Senate passes 'sweeping' reform, everything will be different now...

So after a lot of horse trading, head banging, foot stamping, political posturing, and media fawning, the "biggest, most massive, sweeping, humongous, gigantic, enormous, stupendous, financial overhaul/reform bill  passed the Senate today 60-39. President Obama is now set to sign it into law, declaring it a great victory for his party, Main Street over Wall Street, and possibly all humankind next week. So, let me ask you this: how many of you think that Wall Street is really quivering with fear over this seismic interruption to its status quo?