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Tuesday, 29 January 2013 10:47

Treasury Approved Bonuses and Raises for Wall Street Bankers Who Tanked Economy

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MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT      treasurydepartment Treasury Department

During the Bush presidencies, we thought that DC had turned into a Republican version of the Yale Secret Society "Skull and Bones" (which the Bush's had a dynastic membership in), in which the few inside players in government and finance protect and enrich each other – not to mention remain unaccountable for illegal governmental actions.

But as BuzzFlash at Truthout has reported again and again, the Obama administration – through the Department of Justice (DOJ), Treasury Department, Securities and Exchange Commission, and assorted other executive branch agencies and departments – has frequently applied a double standard to the masters of the universe when it comes to the rule of law and financial gain.

The BuzzFlash at Truthout commentaries dealing with the Washington DC government/Wall Street insider club are too many to mention, but our most recent critiques were "The Covington & Burling Trio Overseeing the Department of Justice Criminal Division: An Injustice" and "Consigliere Lanny Breuer, Head of the DOJ Criminal Division, Leaves Without Prosecuting One Made Man on Wall Street."

If you are a member of the masters of the universe secret society – the smug, career opportunist, ultra-rich governing/corporate class – you have something akin to a bullet proof vest at your disposal, only it is a prosecution proof garment that keeps you from going to jail for financial misconduct, while the guy who cashes three bum checks gets life in prison in some states.

Now, we learn that the Treasury Department in the Obama administration had a complementary program to the DOJ's protection racket for banksters who used illegal and legal actions to nearly burn the US economy to the ground.

According to the January 28 New York Times,

Top executives at firms that received taxpayer bailouts during the financial crisis continue to receive generous government-approved compensation packages, a Treasury watchdog said in a report released on Monday.

The report comes from the special inspector general for the Troubled Asset Relief Program, the bank bailout law passed at the end of the George W. Bush administration. The watchdog, commonly called Sigtarp, found that 68 out of 69 executives at Ally Financial, the American International Group and General Motors received annual compensation of $1 million or more, with the Treasury’s signoff.

All but one of the top executives at the failed insurer A.I.G. — which required more than $180 billion in emergency taxpayer financing — received pay packages worth more than $2 million. And 16 top executives at the three firms earned combined pay of more than $100 million.

“In 2012, these three TARP companies convinced Treasury to roll back its guidelines by approving multimillion-dollar pay packages, high cash salaries, huge pay raises and removing compensation tied to meeting performance metrics,” Christy Romero, the special inspector general, said in a statement. “Treasury cannot look out for taxpayers’ interests if it continues to rely to a great extent on the pay proposed by companies that have historically pushed back on pay limits.”

Please note the phrase "removing compensation tied to meeting performance metrics."  Supposing you are a salesperson and you told your boss that you wanted a raise, but it didn't matter that your sales had dropped 75% in the last year.  After all, you are a member of the insider's club and therefore you deserve a lavish increase in your salary plus a bonus just for being you.  Do you think that you boss would grant your requsest or fire you?

The Obama administration – through its gross negligence in pursuing an aggressive investigation of financial criminal behavior at the top of Wall Street and its approval of bonuses and increases for individuals who don't meet performance goals – tarnish the notion of the rule of law and rewarding hard work that ends in success, not failure.  It's an affront to both justice and the idea of financial gain being tied to competence.

In short, Obama, Geithner, Holder and others in the executive branch are sending a message that if you got enough dough and run banks too big too fail, you can break the law and hurt the economy for the average American, but you won't be held accountable – and they will allow you to be rewarded to boot.  After all, for Geithner and Holder – and careerists such as Lanny Breuer – the people who benefit from their "see no evil" attitude will probably be their future colleagues and clients, as these same elitists were in the past.

The Washington Post similarly interpreted the TARP accountability report on bonuses:

Monday’s report evaluates Treasury’s actions since then, with stinging allegations of lax oversight and supervision….

“Treasury made no meaningful reform to its processes,” the special inspector said in the latest report. “Lacking criteria and an effective decision-making process, Treasury risks continuing to award executives of bailed-out companies excessive cash compensation without good cause.”

According to the report, Treasury approved total pay packages exceeding the 50th percentile by more than $37 million for nearly two-thirds of the top 25 employees of AIG, GM and Ally. The three firms combined received nearly $250 billion in TARP funds. Only AIG has fully repaid its $182 billion bailout."

The Obama administration is teaching a lesson about values and ethics to Americans that is precisely the opposite of the American narrative about the value of hard, honest and productive work.

It's like promoting a pilot who is drunk and crashes a plane, turning a blind eye to all culpability and giving him an increased salary in the process.

As for the injured and the dead, we guess the message is that they should have been pilots if they wanted immunity from prosecution and a nice raise and bonus to boot.

A members only club has its privileges.

(Photo: Joe W. Campbell)