June 4, 2009
The Facts
In 2008 Lloyd Blankfien was the top earner in CEO pay. He earned $42.95 million as CEO of Goldman Sachs. Number 2 was Kenneth Chenault, CEO of American Express, who earned $42.75 million, and number 3 was Vikram Pandit of Citigroup. Pandit earned $38 million in spite of the fact the company lost $27.7 billion and was only able to stay in business with a $45 billion bailout by us taxpayers.
At a recent shareholder meeting, Pandit caught hell from the shareholders. But giving up his ill-gotten wealth was never a consideration. However, he did say “I get the new reality”, and agreed to accept just $1 as his 2009 salary. But he offered no apology for his good fortune as CEO while the shareholders lost nearly everything they had.
There’s not much hope that these outrageous and unearned fortunes will cease. Although the government, as keeper of the purse strings, has the power to do something about it, no one expects them to do so. The Obama administration flexed their muscle with General Motors, but the financial institutions are a different matter. The boards of directors will call those shots, and according to this article by Bloomberg, it unlikely they will rein in the excesses.
According to the article, “CEOs of the top 20 financial companies in the ranking all chalked up pay packages in excess of $10 million, in a year when the performance of their commercial and investment banks and insurance companies was uniformly poor”. Frank Glassner, managing partner of Veritas Executive Compensation Consultants, said “the disparity between pay and company performance is as large as I’ve seen in my 33 years in this business”.
My View
Although the government currently has the same muscle they used with GM (but never used with banks), once the TARP funds are repaid, the government will no longer have any power over how banks spend taxpayer money. But the banks will still have plenty of our money to spend, what with the open (back) door policy of the Federal Reserve and Federal Depositors Insurance Corporation. Thus the reason the banks are so anxious to pay back the TARP funds. I find it ironic, but not surprising, that the pro-theft advocates, such as CNBC, are carrying the torch for banks paying back TARP funds. In spite of the fact that banks couldn’t stay alive for a week without taxpayer money, TARP or otherwise, they still think they should be allowed to run amok with our money.
Alan Johnson of Johnson Associates, a consulting firm, says in reference to executive pay “I think the Treasury would love to do a wink and a nod”. Hell, that’s what they’ve been doing from the very start. Or at least once the public became aware of what the banks were doing with our money. Originally, Hank Paulson, then treasury secretary, never had to give a “wink and a nod”. It was just ‘here — do with it as you please’. But the idea now is to simply give the appearance of reigning in these thieves with a little grandstanding, but in reality do nothing except continue handing over money from the taxpayers with no strings attached. The Bloomberg article says “four executives of financial companies told Bloomberg News they expect the administration to loosen the pay restrictions. One said they would disappear by year-end”. Naturally, by then the hope is the issue of executive pay will have gone away.
Until we-the-people step up to the plate and lay down our law, we can expect nothing better. The U.S. government has long been the protector of corporations, and now they’ve become the endless supplier of money extorted from the middle and lower class citizens (upward distribution of wealth). I can tell you now, with just a month of bombarding the White House and congressional members with emails, snail mail, and phone calls, they’d find out quick who they work for and who they represent. You can start by going to this government website. And if you’ve been one of those who fell for that malarkey that we need those same thieves to get us out of this mess, wake up and smell the roses. If you believe that why don’t we simply hire prison inmates as guards so we can stop the drug trafficking and other illegal things going on in our prisons since they’re the only ones who know how it works?
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