Banks that sucked on the public tit of government bailout funds continue to ladle out lavish perks and benefits to the very executives who led them into financial chaos and, in too many cases, the federal government is sitting back and letting it happen.
While cash-strapped Americans find themselves slapped with 29 percent interest rates from the banks that they helped bail out as taxpayers, the financial institutions hand out huge bonuses and fly their top execs around on private jets and pay the tab for luxury hotels and fancy “corporate apartments.”
They ride around in chauffeured limos, play golf at exclusive country clubs with their employers picking up the tab and see little of the pain and suffering that they helped inflict upon many Americans.
Perks for top executives at troubled banks rose an average of four percent last year. In the meantime, Social Security face the coming year with no cost-of-living increase in their benefits and millions of Americans will lose unemployment benefits when they run out soon.
Even as the nation’s biggest financial firms were struggling and the federal government was spending hundreds of billions of dollars to save many of them, the companies as a group were boosting the perks and benefits they pay their chief executives.
The firms, accounting for more $350 billion in federal bailout funds, increased these perks and benefits 4 percent on average last year, according to an analysis of corporate disclosures filed in recent months.
Some chief executives, such as Kenneth D. Lewis of Bank of America and Jeffrey M. Peek of CIT Group, the major small-business lender now on the brink of bankruptcy, each received about $100,000 more than a year earlier for personal use of corporate jets. Others saw an increase in the value of chauffeured services, parking or personal security.
Ralph W. Babb Jr., chief executive of Dallas-based lender Comerica, was compensated for a new country club membership, with an initiation fee and dues of more than $200,000. GMAC Financial Services chief executive Alvaro de Molina benefited from a $2.5 million payment from his company to help cover his personal tax bill.
Meanwhile, the top economic advisors to Barack Obama signed off on a deal to protect Bank of America from losses in its questionable takeover of Merrill Lynch.
Top economic advisers to President Obama signed off on a deal to protect Bank of America from losses incurred by its purchase of failed Wall Street firm Merrill Lynch a month before the new administration took office, according to Bank of America documents.
The documents, describing internal discussions at the bank in late 2008, assert that executives were told that incoming National Economic Council Director Lawrence H. Summers and incoming Treasury Secretary Timothy F. Geithner had endorsed the deal to provide new guarantees to Bank of America.
The acquisition has been a source of protracted debate since earlier this year, when questions arose about whether federal officials exerted an inappropriate amount of pressure on Bank of America to complete the deal. There’s also been debate about whether the bank made appropriate disclosures to its shareholders about losses at Merrill Lynch, its negotiations with the government for additional support and compensation plans at Merrill Lynch.