With the financial system on the verge of collapse in late 2008, a group of troubled banks that were TARP recipients doled out more than $2 billion in bonuses and other payments to their highest earners. Obama administration's czar Kenneth Feinberg's review released Friday did not determine that payments were contrary to the "public interest" requiring monetary reimbursement, but simply "ill-advised". Therefore, government did not get any authority to force repayment from employees or companies under the Recovery Act. Rather than demanding they return the money, Feinberg invited the 17 banks listed to give their boards of directors more power to withhold pay during future crises, but ... the request was voluntary!!
July 22.─ In a report released on Friday (Kenneth R. Feinberg, the Obama administration’s special master for executive compensation, named 17 financial companies that made questionable payouts totaling $1.58 billion immediately after accepting billions of dollars of taxpayer aid, according to two government officials with knowledge of his findings who requested anonymity because of the sensitivity of the report.
The group includes Wall Street giants like Goldman Sachs, JPMorgan Chase and the American International Group as well as small lenders like Boston Private Financial Holdings. Mr. Feinberg’s report points to companies that he says paid eye-popping amounts or used haphazard criteria for awarding bonuses, the people with knowledge of his findings said, and he has singled out Citigroup as the biggest offender.
Even so, Mr. Feinberg has very limited power to reclaim any money. He can use his status as President Obama’s point man on pay to jawbone the companies into reimbursing the government, but he has no legal authority to claw back excessive payouts.
Mr. Feinberg’s political leverage has been weakened by the banks’ speedy repayment of their bailout funds. Eleven of the 17 companies that received criticism in the report have repaid the government with interest, so they have no outstanding obligations to reimburse...
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