Nelson Mandela: A life in pictures
Nelson Mandela and his wife Winnie in this undated file picture.
For all his tough talk about excessive pay for bankers, the Obama administration’s pay czar let the executives go without a fight.
Kenneth Feinberg announced Friday that he would not try to recoup $1.6 billion in compensation given to top executives at bailed-out banks because he thought shaming them was punishment enough.
His decision to go easy on 17 banks that made “ill-advised” payments to their executives is likely to fuel concerns about how he will oversee the $20 billion oil spill compensation fund created by BP.
“I’m not suggesting we should blink or turn the other cheek,” Feinberg said later in an interview with The Associated Press. “These 17 companies were singled out for obviously bad behavior. The question is: At what point are you piling on and going beyond what is warranted?”
He could not force the banks to repay the money, but the law instructed him to negotiate with banks to return money if he determined that the pay packages were “contrary to the public interest” — language that he opted not to use.
Still, his leniency is a far cry from the bravado he displayed in the months leading up to his final act as pay czar. In February, he spoke with confidence about his ability to get companies that received taxpayer help to accept less.
In an interview with The Hill newspaper, Feinberg said he had been “fairly successful in convincing the companies that it is in their best interests to seek an accommodation on compensation.”
Among the companies Feinberg did not pursue were two whose bailouts are expected to cost taxpayers more than $38 billion: American International Group Inc. and CIT Group Inc. He also ignored excessive pay at Wall Street powerhouses such as Goldman Sachs Group Inc. and JPMorgan Chase & Co., which reaped massive profits from government efforts to stabilize the financial system. They had no trouble repaying their bailouts.
He said a fight with those banks could have exposed them to lawsuits from shareholders trying to recapture the executives’ money, and he did not think that would be fair.
Sen. Bernie Sanders, a Vermont independent, said he was disappointed that Feinberg decided there was no way to force the banks to return the bonus payments.
“These people’s jobs were saved by the taxpayers of this country, and their response was to give themselves these huge bonuses,” Sanders said. “Many Americans lost their jobs because of this Wall Street greed. It is one of the reasons the American people are as angry as they are.”
Many Gulf Coast fishermen are angry, too, at the way BP and the government have handled the legal claims of those whose earnings have been hurt by the oil spill.
Paul Nelson, a fisherman in Coden, Ala., who leads the South Bay Communities Alliance on the Alabama coast, said the fishermen he represents feel they have no voice in the claims process.
“Where is the citizen input?” he said.
It’s not the first time Feinberg has talked tough but taken a light touch with bankers.
He clashed publicly with AIG CEO Robert Benmosche — while quietly approving a pay package worth more than $10 million.
He announced in October 2009 that he had cut cash pay by 90 percent at the handful of companies that got the biggest bailouts. Yet the changes were not retroactive; they only applied to the final six weeks of that year.
That track record concerns some Gulf state officials.
Alabama Attorney General Troy King announced Thursday he will file suit against BP to recover tax revenues lost because of the oil spill and to recoup cleanup costs. At the news conference, he said Feinberg seems to be working more for BP than for the people harmed.
Feinberg strongly defended his independence from BP, saying his actions “speak for themselves.”
“I think both the administration and BP will acknowledge my absolute independence,” Feinberg said. He added that anyone who believes he “went easy on the banks hasn’t carefully read what I did over the past 16 months, and what I did today regarding these 17.”
Rather than demanding they return the money, Feinberg invited the 17 banks that overpaid workers to give their boards of directors more power to withhold pay during future crises. The request was voluntary.
Feinberg reviewed 419 companies that received bailout money before pay curbs were enacted by Congress in February 2009.
The review covered the period from October 2008 to February 2009. The starting point was when banks began receiving bailout money under the Troubled Asset Relief Program. The ending point was when Congress enacted pay curbs on institutions receiving government support.
Feinberg determined that a total of $1.7 billion in payments were made during that period that would have violated the guidelines adopted later. And $1.6 billion of that amount was paid out by 17 of the country’s largest financial institutions.
In addition to AIG, CIT Group, Goldman and JPMorgan, Feinberg criticized pay at the following banks: American Express Co., Bank of America Corp., Boston Private Financial Holdings Inc., Capital One Financial Corp., Citigroup Inc., M&T Bank Corp., Morgan Stanley, Regions Financial Corp., SunTrust Banks Inc., Bank of New York Mellon Corp., PNC Financial Services Group Inc., USBancorp and Wells Fargo & Co.
Associated Press writers Kendal Weaver and Bob Johnson in Montgomery, Ala., and AP Economics Writer Martin Crutsinger in Washington contributed to this report.
Nelson Mandela and his wife Winnie in this undated file picture.
Mandela is accompanied by his former wife Winnie, moments after his release from prison February 11, 1990 after serving 27 years in jail. (Reuters)
In this February, 1990 photo, shortly after his release from 27 years in prison, Nelson Mandela, gives the black power salute to the 120,000 supporters packing Soccer City stadium in Soweto, near Johannesburg. (AP Photo)
Nelson Mandela showed his passport in February 19, 1990, shortly after his release from prison. The South African government authorized an application for himself and his wife Winnie - (Juda Ngwenya / Reuters)
In this July 27, 1991 photo, Cuban President Fidel Castro, and Nelson Mandela gesture during the celebration of the "Day of the Revolution" in Matanzas, Cuba. (AP Photo)
In this July 4, 1993 photo, President Bill Clinton and Nelson Mandela listen during Fourth of July ceremonies in Philadelphia during which Clinton presented the Philadelphia Liberty Medal to the African National Congress president and South African President F.W. de Klerk. (AP Photo/Greg Gibson)
President of the African National Congress Nelson Mandela acknowledges cheers from the crowd as he prepares to unveil the ANC's official election platform in 1994. (AP Photo/David Brauchli)
African National Congress (ANC) leader Nelson Mandela greeted residents of Mmabatho in March 1994, during a visit after the nominal homeland came under South African control following the ousting of the former President Lucas Mangope. (Reuters/Howard Burditt)
South African President Nelson Mandela smiles with actor Sidney Poitier at a press conference in Cape Town in 1996. Poitier played Mandela in the film "One Man, One Vote" (AP Photo / Sasa Kralj)
South African President Nelson Mandela waves to crowds as he sits next to Queen Elizabeth II in a an open carriage on the way to Buckingham Palace.(AP/Louisa Buller)
Chairman of the Constitutional Assembly Cyril Ramaphosa, left, holds up a copy of the country's constitution which was signed by President Nelson Mandela, in December 1996. (AP Photo / Adil Bradlow / POOL)
Nelson Mandela at a news conference in Johannesburg in February 2000. (AP Photo / Denis Farrell)
South African rugby captain Francois Pienaar, right, received the Rugby World Cup trophy from President Nelson Mandela also wearing a South African rugby shirt, after South Africa defeated New Zealand in the Rugby World Cup , in 1995. (AP Photo / Ross Setford)