It’s Not Fair! Claims Bank of America on Pay Reductions

Published on October 23rd, 2009

WASHINGTON (Reuters) – The U.S. pay czar on Thursday slashed compensation for top earners at seven bailed-out companies for the final two months of the year, and was immediately slammed by the country’s largest bank which claimed the cuts could send talent fleeing.

Many of the firms, which have together received more than $300 billion in taxpayer aid, issued conciliatory statements, but Bank of America said the ruling would put it at a disadvantage in competing with companies not under the pay czar’s thumb.

“People want to work here, but they want to be paid fairly,” said BofA spokesman Scott Silvestri.

Pay czar Kenneth Feinberg said competitive concerns and public outrage both played a role in how he reworked pay contracts for the 25 highest-paid employees at the five financial firms and two automakers who are the biggest recipients of government aid. He said their cash compensation rates for the remainder of 2009 would drop 90 percent compared to 2008. Their overall compensation rates for those two months would on average be cut in half. But he added he will not claw back payments already made. “I’m not going to go back and ask everybody to repay what they’ve already earned,” Feinberg said.

The companies affected are American International Group Inc, Bank of America Corp, Citigroup Inc, General Motors Co, Chrysler, GMAC and Chrysler Financial.

U.S. officials have said Wall Street pay practices must be reformed to rein the excessive risk-taking that fueled the crisis that pushed the financial system to the brink of collapse last year.

Huge pay packages for banks and other financial firms have ignited public anger at a time the U.S. unemployment rate is at a 26-year high and seen climbing.

If they were so damned talented…maybe we wouldn’t be in this mess. I say they can all resign, go out and work for a living like the rest of us.

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# 1 Thinker said, on October 23rd, 2009 at 7:57 am

I’m with you there! It was talent that got us into this mess in the first place!

# 2 Phydeau said, on October 23rd, 2009 at 8:00 am

Big whoop. Their pay is getting cut for two months. I’d bet money that in January they give themselves bigger bonuses to make up for it.

I’m all in favor of limiting obscene salaries in companies we bail out, but more permanently, until they get off the government dole. Two months is nothing.

# 3 Rick said, on October 23rd, 2009 at 8:00 am

I’m pretty sure that the people who want to work there want to be paid UNfairly. Otherwise this adjustment wouldn’t upset them.

For good or bad, they asked for the devil’s money and now they get to deal with the strings that it has attached. In my opinion, as it was our money they gave them, we should get to have more say than this in their doings.

Beyond that, if these talented people are so great, surely there will be some other company looking to pay them outrageous sums. What’s that? There are no companies paying like that that are still free of bail-out money? Oh.

There’s always the health insurance trade…

# 4 eaglescout1998 said, on October 23rd, 2009 at 8:01 am

If Hank Paulson had not forced these banks to accept bailout money in the first place….

# 5 Hmeyers said, on October 23rd, 2009 at 8:10 am

I thought the bank bailouts were a bad idea to begin with.

With or without this, the bank bailouts wasted about a trillion for little to nothing to show for it.

# 6 dusanmal said, on October 23rd, 2009 at 8:20 am

Typical BigGovernmental procedure. First regulate in such a way that business can’t follow good practices (in this case, force banks to lend to whoever but watch for upcoming carbon or health care mandates). Than when the whole sector is in trouble, burden us, taxpayers to pay for it. Finally, claim our money as BigGovernmental money and control the sector by “czars” who we didn’t elect and over whose decisions we do not have any powers. Of course, place blame on greedy “others”.
I’d accept their “new regulation” if it and the Czar are put to referendum vote and if the most responsible for starting this crisis (Frank, Dodd,…) by forcing insane banking practices are sent to jail with their comrade Madoff.

# 7 Pmitchell said, on October 23rd, 2009 at 8:21 am

I want to cut the congress pay by 90% they have done nothing but spend us into oblivion and take payoffs

lets see what those worthless bastards think of this idea

# 8 SparkyOne said, on October 23rd, 2009 at 8:24 am

BFD, I have had my pay cut 100% since November.

Saved + Created = LESS THAN ZERO

# 9 Alfred1 said, on October 23rd, 2009 at 8:26 am

So the premise receiving Government money = government control.

Then everyone collecting unemployment insurance, social security etc…bailouts under various euphemisms, are subject to Government inspection, analysis, and management of their personal life…to root out any luxurious excess that offends the proletariat.

No doubt PC Magazine runs ads by companies that sell goods to the Government…therefore it also must modify its pay scale, especially to John C Dvorak…such excess must not offend the proletariat’s world view of right and wrong.

Its not right he have any money, while folks sleep under a bridge. His compensation should immediately be rolled back by 90%.

# 10 cantigas said, on October 23rd, 2009 at 8:27 am

Like with sports salaries, if the pay is too high, where should the money go then, to the owners? Having BofA retain the money in the asset column is just as bad. If it doesn’t go to lower consumer rates (or ticket prices in the analogy), then I say let the employees have it.

# 11 Alfred1 said, on October 23rd, 2009 at 8:28 am

#8 Congress always exempts themselves from the rules…just as they will exempt themselves from Obama care serfdom…

they are rulers, not representatives…that is seen by their superior pay scale, and their being above the law they establish for us.

# 12 bill said, on October 23rd, 2009 at 8:29 am

You’re fired!

# 13 Alfred1 said, on October 23rd, 2009 at 8:31 am

Rush Limbaugh made many excellent points about this yesterday…chief of which…Obama demonizing the Bank Execs., and stealing their money, won’t put a dime in our pockets…

Not one person sleeping under a bridge will be thereby helped.

Rather unintended consequences will be experienced Bank Execs leaving, inexperienced ones taking their place…and our bail out banks might requires billons more in bailouts.

The loons no doubt say “Thank you Obama…for doing nothing for job creation…and everything for job destruction…the carbon footprint is being reduced.”

# 14 Angus said, on October 23rd, 2009 at 8:34 am

Pretty sure B of A didn’tneed to take the money, so boo hoo on them. That being said, I wonder how rock solid the bailout agreement was, and if B of A could sue the US Government to prevent these pay cuts?

It seems to me the only reason these firings and pay cuts work are because the affected companies took government money. Even so, I’m not sure I like the idea of the Obama Administration, or any other for that matter, firing and hiring who they want at some of the largest companies on Earth.

# 15 Alfred1 said, on October 23rd, 2009 at 8:45 am

#14 Its hard to feel sorry for these greedy capitalists…I object only because of constitutional reasons…Getting money from the Government does not mean “sold to the Government.”

BUT I agree with you…they should sue…not meekly roll over for more Government sex.

# 16 Sea Lawyer said, on October 23rd, 2009 at 8:51 am

Didn’t BofA’s troubles come as a result of Paulson/Bernanke persuading them to buy up Merrill Lynch?

# 17 Mr. Fusion said, on October 23rd, 2009 at 8:56 am

#15, Alphie,

Government regulation is not the same as government ownership. Even though the government does have a lot of stock in these banks currently.

I have a hard time understanding how any flight of “talent” will hurt any of these banks. That “talent” either screwed up the investments and / or allowed the bad investments to occur in the first place. They have shown themselves to be incompetent. Instead of bonuses, they should be shown the door.

If any executive needs to earn several million a year plus huge bonuses, they have a spending problem. I am a little surprised that the right wing nuts that claim America spends too much thinks it is fine if a group of people rape their company, take huge amounts of money for it, and expect the taxpayer to bail them out.

# 18 Phydeau said, on October 23rd, 2009 at 9:02 am

#6 Stop hyperventilating about czars, they’re just people with long job titles appointed by the president to serve in the executive branch. They’re not elected officials, never have been. So chill, OK? Presidents have had “czars” for a while. Bashing Obama for doing what presidents have been doing for a long time just makes you look like an Obama basher. Surprise, surprise.

And we’re in this trouble because we relaxed regulation on the big banks and they went and did stupid and greedy things… even Alan Greenspan admitted as much. And he has a libertarian leaning so for him to admit this is big.

And as many have said before, talent? What “talent” are they scaring away? They ran the economy into a ditch, I think they should be scared away.

# 19 BertDawg said, on October 23rd, 2009 at 9:03 am

#16 Sea Lawyer – thought-provoking post, but not ALL their troubles… Friends tell me consistently they have all had bad experiences with BofA and if BofA was the only game in town, they would resort to a coffee can before doing business with that organization again.

# 20 Phydeau said, on October 23rd, 2009 at 9:04 am

#15 BUT I agree with you…they should sue… not meekly roll over for more Government sex.

There you go with that anal sex thing again alfie… Rush would be proud.

# 21 MikeR said, on October 23rd, 2009 at 9:05 am

If the BofA had been bought out in a hostile takeover by a private firm, do you think the new owners would have left pay rates the same?

# 22 Mr. Fusion said, on October 23rd, 2009 at 9:05 am

#6, dusan,

Not only is your post full of garbage, you you are obviously behind the times on the news.

The “czar” overseeing executive pay is appointed by the President and approved by the Senate. He reports to the Secretary of the Treasury. He is acting under an Act of Congress. But yes, calling him a “czar” sounds so much better.

I fail to understand why you blame Frank and Dodd for the economic collapse. Bush was the President and was responsible for the administration of the government. Bush was the one that forced Fanny Mae to accept the toxic paper.

I visited your web site. Your photos are as inspiring as Alphie’s posts. You really should study a little composition before thinking you are a photographer.

# 23 AdmFubar said, on October 23rd, 2009 at 9:08 am

they either take a pay cut, or serve on the front lines in afganistan..

enough said

# 24 chuck said, on October 23rd, 2009 at 9:10 am

A little advice to those at BofA who don’t think they’re paid enough: Quit. I’m sure we can find a replacement.

And, after you quit, if you have difficulty finding a new job, why not jump off a building?

# 25 Sea Lawyer said, on October 23rd, 2009 at 9:20 am

BertDawg, yeah, your friends’ lousy service experience at a bank branch is of equal significance to BofA agreeing to buy a large investment banking firm about to go bankrupt at the behest of the government, with the promise of government backing as a safeguard. And when BofA does the government a favor, now the government “pay czar” is telling their executives that they make too much money.

# 26 ECA said, on October 23rd, 2009 at 9:41 am

What country pays the highest TOP wages in the world??

USA.
10- 10000 TIMES as much as MOST other countries, even comparing to the other countries BASIC pay all the way up..The TOP gets more money per capita them Anywhere else.

# 27 ECA said, on October 23rd, 2009 at 9:42 am

IF’ half the companies in the USA would cut the TOP wages and drop prices on goods accordingly. GUESS WHAT…we could save this country, FAST.

# 28 Rick said, on October 23rd, 2009 at 9:50 am

#27 it sounds great. So, how can we expect to ever save this country by this model if we leave regulation off the table? Not one single company would self regulate for the better of anyone else…it is just a reality.

I’m not a fan of regulation, but I AM a fan of the free market. Trouble is, the game has been fixed for long enough that there is no free market possible now. The big guys run the show. The dynamic of competition actually being good for the system isn’t possible as true competition isn’t possible…for bad reasons.

Regulating things to return to an environment in which a market truly can be free is not a bad thing and is surely not the same as socialist regulation bla bla bla…

# 29 esoterroriffik said, on October 23rd, 2009 at 9:59 am

Serves them right. First they get us into this mess with playing along with the toxic asset scheme, and then they want to add an additional 18.25% interest on top of my 18% interest rate on the credit card I do not use and have been paying down for the last two years that I had to get to pay for college because BOA did not approve me for a college loan. On top of it all they would not allow me to cash a third party check from a roommate who was present with me for money owed to me on rent. What the hell is a bank for any how? Then they hold on to my automatic deposits until three more with draws or deductions processes so that I am always in the fricking hole, and then post the deposit and take out their fees. I work three jobs and for what? The bank to take my money. I have finally changed to a credit union, and have had no problems. After 10 years of BOA I only gotten poorer. The only reason I had BOA was because I traveled abroad quite often. F**k ‘em!

# 30 Alfred1 said, on October 23rd, 2009 at 10:17 am

#17 Your ad hominem against these CEOs is irrelevant…the economy melted down, ensnaring everyone, not just these execs.

If the Government owns the banks, then they make the rules…but they are bullying them, facism.

Coercing them to do was the government wants, although they do not own them = FACISM.

Once the precedent is set, then anyone getting Government money is subject to their control…

Then it would require Supreme Court rulings to define the precise path Gov money must take, to convey its control over the business.

So John C Dvorak, who gets paid by PC Mag, which receives money from businesses that sell to Government…is now under their control?

It would take the Supreme Court to rule otherwise.

# 31 Hmeyers said, on October 23rd, 2009 at 10:26 am

This move is fiscal irresponsible.

What if this causes one or more of the executives to default on his mortgage?

I mean, haven’t we seen enough home foreclosures as it is?

# 32 The Aberrant (formerly known as Alex) said, on October 23rd, 2009 at 11:08 am

I love how Obama is now, apparently, a Socialist Nazi Feudal Lord.

(Because, apparently, Alfred1 has no *fucking idea* what a serf, or serfdom, is about.)

# 33 moondawg said, on October 23rd, 2009 at 11:11 am

#12. BUSH didn’t deregulate the banks. CLINTON did, with the help of a republican congress in 1999

But don’t let the facts interrupt you.

# 34 moondawg said, on October 23rd, 2009 at 11:14 am

OOps. that was for #22. and I thought he was blaming Bush for deregulation… but he wasn’t.

Retracted!

# 35 tcc3 said, on October 23rd, 2009 at 11:31 am

Alfred, You keep using that word (fascism). I do not think it means what you think it means.

# 36 Bob said, on October 23rd, 2009 at 11:39 am

Here is Obama’s appointee trying to deflect attention from Obamacare, by demonizing something, that in the grand scheme of things means nothing.

It wouldn’t matter if every cheif executive in all the fortune 500 companies were suddenly required to give all their income to the government for a year. Obama has spent so much, its now a drop in the ocean.

This is a redirection scheme guys, and most of you, even the neolibs, deep down know it. The only lasting impact this will have is a further erosion of private business rights.

I may not agree with everything Alfred says, but he is right on thing, this will not stop at the bailout companies, and it won’t stop with large corporations either. Now that you guys have given this power to the government, it will be used in all sort of creative ways.

Its amazing how we humans continue to shoot ourselves in the foot, over stupid things like jealousy. In the end we deserve what we get.

# 37 Li said, on October 23rd, 2009 at 11:48 am

I was on a comment thread at a fairly middle of the road site about the big bonuses that Goldman announced a few days ago. In just the comments I read, the word ‘guillotine’ was used nearly two dozen times. References to hanging them off of lampposts, perhaps a dozen times. Tarring and feathering was more prominent even then that.

These whiny titty babies may not realize it, but Obama probably saved their worthless lives with this move. People are not going to tolerate having their lives destroyed, their credit pulled, and their homes foreclosed upon while these super-entitled jackasses continue to shit in the tall cotton forever. Frankly, if these idiots can’t see the rising ill will against them, they are obviously not clever enough to run banks. They aren’t even clever enough to save their own hides.

# 38 Alfred1 said, on October 23rd, 2009 at 1:12 pm

#37 Incorrect…the bastards that caused this are the very Congressmen and Senators (including Obama) who took lobbyist money and looked the other way…or legislated to enable…the theft.

And now they run the bailouts the same way.

Whatever generated kickbacks…that they do…nothing for real job creation…all to enrich them…

What they want to do to health care, is already revealed in what they did to Medicare…

Medicare pays $4000 for a $1000 wheelchair, or rents for $6000 a year, a $600 oxygen bottle…and when a freshman senator or congressman tries to stop it…the lobbyists come out of the woodwork…and buy him off…

Now these crooks want to run their protection racket on 1/6th of our economy…they don’t care that will bankrupt the US…they already have their golden parachutes overseas…

And you say the people won’t suffer them…

If a tree falls in the forest, and no one is there to hear it, did it make a sound?

Of course it did, but it was immaterial,irrelevant, of no consequence…our Establishment media does not expose these crooks…you look to them as your savior…the sound of their crimes is irrelevant…no one hears it.

# 39 ECA said, on October 23rd, 2009 at 1:50 pm

28,
thats WHY the USA needs to make and FORCE a standard business model and practice.
Think about it..
Other countries bring cars to the USA and sell at REASONABLE prices, but the owner/CEO doesnt get anymore pay..
WE sell to other nations, and our owner/CEO get paid 100 times MORE..
Only persons getting SCREW’d is the people of the USA.

I hope you know that the IRS has NO WAY to track or trace most deductions that Corps make. They have no computer that can INTERLINK payments to companies..they cant even find many of these companies and BUSINESS tends to hide the STACKS of info in STACKS of info..

# 40 Shenzhov said, on October 23rd, 2009 at 2:13 pm

I love that picture.
It should now be used as the poster of Rush Limbaugh crying that we don’t have a white president any longer.

# 41 Li said, on October 23rd, 2009 at 2:39 pm

I never said that the Congress has not completely abdicated it’s duty. But absolving the bribing idiots who got the system rigged just as they liked and then promptly crashed into the ground deserve is a strange form of blindness. Besides, there have been trillions of dollars robbed out of our system for decades. Just before 9/11 Ol’ Rumsfeld admitted that the Pentagon had lost 2 trillion dollars or more over the past few years.

Continuing to see this through partisan eyes can only lead to more suffering. A catastrophe of robbery and greed on this scale is either not a point of political disagreement between the parties, or so far out of their knowledge and control so as to render them irrelevant.

# 42 Li said, on October 23rd, 2009 at 2:41 pm

Deserve? I type these things out fast, that must have been a Freudian slip.

It should have read

I never said that the Congress has not completely abdicated it’s duty. But absolving the bribing idiots who got the system rigged just as they liked and then promptly crashed it into the ground is a strange form of blindness

# 43 BigBoyBC said, on October 23rd, 2009 at 5:31 pm

I’m so sick and tired of that old chestnut; “you need the high salaries to keep and attract the best and the brightest”

BS!! While Chase is claiming record profits after our tax money cleared their books, they’re jacking up my intrest rates to 31%.

Should have let them all go bankrupt!!!

# 44 deowll said, on October 23rd, 2009 at 6:24 pm

#43 The same thing is happening to them that is happening to you. If you owe they own you.

Stop spending what you don’t have!

# 45 ggore said, on October 24th, 2009 at 3:46 am

This so-called “Talent” was allowed, with no regulation, to gamble away most of the money on the planet on credit default swaps, etc, and they think they deserve more money? I think not!!!!

# 46 Buzz said, on October 24th, 2009 at 4:41 am

Duck you, BofA, eat spit and cry!

# 47 LibertyLover said, on October 24th, 2009 at 6:21 am

#14, Just wait until FedCare comes to be. The government gets access to every company’s books. How long do you think it will be before they start making “suggestions” to small business owners who happen to make “too much?”

# 48 LibertyLover said, on October 24th, 2009 at 6:31 am

#18, <i.And we’re in this trouble because we relaxed regulation on the big banks and they went and did stupid and greedy things… even Alan Greenspan admitted as much. And he has a libertarian leaning so for him to admit this is big.

In the 1960s, Greenspan wrote the following:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Later in 2004, when questioned on this, he said that it was possible to manipulate the value of the dollar so that it “appeared” to be based on gold or other commodities.

We saw how that worked out.

Mr. Greenspan said those things to save face after his actions while in office from 1987 to 2006 failed.

I wonder if he did what he did so it would come crumbling down to prove his point from the 60s about fiat currency.

# 49 LibertyLover said, on October 24th, 2009 at 6:34 am

#22, The housing bubble started collapsing in 2000. It was propped up by the Fed with low interest rates.

CRA and it’s ilk are what caused the housing bubble.

# 50 LibertyLover said, on October 24th, 2009 at 6:44 am

#25, Didn’t BofA’s CEO just retire? I guess he finally had enough of the BS.

# 51 ECA said, on October 24th, 2009 at 7:56 am

44,
There is a RULE in this world that covers MONEY as well as DRUGS.

The drug dealer HAS TO GIVE drugs to the person with no money. If he does not want the COPS on him.
With money its almost the same. but Many of you have forgotten. If they dont DEAL WITH YOU, DONT PAY. But you MUST get your money OUT of the bank. ALSO, request to be AT THE HEARING of the court IF’ they take it to court(otherwise they go to court and you HAVE NO SAY).
THEN, if you can, FILE bankruptcy. If not, then dont STICK your money in the bank, unless you know its safe. In oregon, A company can take a Court order tot he bank and TAKE the money directly.

These companies havnt figured out that WE, do have power. its AS A GROUP. think of what would happen if 30,000,000 STOPPED paying/decline to pay the CC cards off. At an avg of $100 per person thats a $3,000,000,000 loss in 1 month.
Look up the reasons for BANKS to be in certain states, it VERY interesting.
Think about the NEXT month, IF’ the rest of the USA hears about this, and decides to QUIT paying. Even if another 10% of the USA(30,000,000) QUIT paying. THE BANK WILL DEAL with you or DIE.

Just as the drug dealer MUST give drugs to the idiot with no money, so that he dont call the cops. The money lender MUST DEAL with you, if you ACT as a group.

# 52 MikeN said, on October 25th, 2009 at 9:14 am

Noone answered the question about Merrill Lynch?
BofA wanted out of the deal, and the government made them keep quiet about how bad MerrillLynch was financially.

# 53 Rick Cain said, on October 25th, 2009 at 8:00 pm

#33, bank deregulation was pushed by the GOP dominated congress, through the Gramm-Leach-Bliley act of 1999 (all 3 are republicans).
Clinton signed it into law because it had a veto proof majority. Unfortunately way too many democrats voted for it as well 8-(.

As for executive salaries, if government is the majority stockholder in a company, then it dictates salaries of executives. That isn’t socialism, thats good old free market enterprise.

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