Executives of banks that were bailed out with taxpayer dollars have pulled down stock options that guarantee them mega-million-dollar windfalls for years to come.
Worse, they’re using our taxpayer money to line their own pockets while laying off workers. Since Jan. 1, 2008, the top 20 financial industry recipients of bailout aid have together laid off more than 160,000 employees. In 2008, the 20 CEOs at these firms each averaged $13.8 million in compensation, for a collective total of over $250 million.
According to a report by the Institute for Policy Studies (IPS), the top five executives at 10 of the top 20 banks that have accepted the most federal bailout dollars received a combined increase in the value of their stock options of nearly $90 million.
Says Sarah Anderson, lead author of “America’s Bailout Barons,” part of IPS’s Executive Excess series:
America’s executive pay bubble remains unpopped. And these outrageous rewards give executives an incentive to behave outrageously, putting the rest of us at risk.
According to the report, the average compensation for the top five executives at the 20 banks averaged $32 million each from 2006 through 2008. It would take 1,000 years for 100 U.S. workers to make as much as these 100 executives made in three years.
These 20 CEOs averaged 85 times more pay than the regulators who direct the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC). These two agencies, many analysts agree, have largely lacked the experienced and committed staff they need to protect average Americans from financial industry recklessness.
One reason the regulatory agencies may lack experienced staff is that many of the best and brightest staffers leave to work for the financial companies where they can make more money. Says report co-author Sam Pizzigati:
The lure of lucrative private-sector jobs doesn’t just siphon off talent from public service. It also breeds corrosive and ever-present conflicts of interest: Why “get tough,” as a regulator, on a firm that could be your future employer?
Click here to download the report.
The IPS report backs up the findings of the AFL-CIO’s 2009 Executive PayWatch site. The PayWatch data shows CEOs and other executives responsible for the financial crisis have pocketed millions of dollars from bonuses and golden parachutes. CEO perks alone grew in 2008 to an average of $336,248—or nine times the median salary of a full-time worker.
Meanwhile, the economy tanked for working people while many companies were bailed out with more than $700 billion in taxpayer money, as well as low-interest loans and guarantees.
Click here to learn more about excessive executive pay on the PayWatch site.
The federal government has done too little too late to seriously address the problem of executive pay. The IPS report praises the Patriot Corporations Act (H.R. 1874), sponsored by Rep. Jan Schakowsky (D-Ill.), which would extend tax breaks and procurement bidding preferences only to those companies that compensate their executive at no more than 100 times the income of their lowest-paid workers. In 2008, the IPS report shows, compensation for top executives averaged 319 times more than average U.S. worker pay.
IPS Director John Cavanagh says:
Unless we also address more fundamental questions about the overall size of executive pay, about the gap between the rewards that executives and workers are receiving, the executive pay bubble will most likely continue to inflate.
Or as IPS Senior Scholar Chuck Collins aptly put it:
Public officials in Congress and the White House hold the pin that could pop the executive pay bubble. They have so far failed to use it.