Credit card company CEOs and top executives have joined the ranks of the big bonus boys at Wall Street’s biggest banks, raking in bonuses and annual compensation for 2009 in excess of $10 million each.
Leaders in the pay sweepstakes include the heads of the credit card giants Visa, Mastercard Worldwide, Capital One Financial and American Express. Joseph W. Saunders, who runs Visa, was paid about $15.5 million
Mastercard president Ajay Banga took in $13.5 million. Hans Morris, former president of Visa, got $10.7 million while the CEOs of Capital One Financial and American Express each took in $10.6 million.
The head of Wells Fargo, the bank that became bigger than ever when it took over failing Wachovia at the end of 2008, became the highest paid big bank executive.
Topping the list is John G. Stumpf, head of Wells Fargo, the bank based in San Francisco, according to an analysis of 2009 compensation in the industry. Mr. Stumpf was paid a personal best of $18.7 million in cash and stock for 2009 — up 64 percent from 2007, just before the financial crisis struck.
The bonus package given to Jamie Dimon, CEO of JPMorgan Chase, is reportedly worth $17 million, while James P. Gorman, CEO of Morgan Stanley, got an $8 million bonus despite the bank having posted the first loss in its 74-year history.
If you’re having trouble wrapping your head around such huge sums, believe me you’re not alone. Just what is an annual pay package of, say $10 million equivalent to? It’s about $192,300 a week or a mere $4,800 an hour.
Other than driving the economy into the deepest recession since the Great Depression, throwing millions of people out of work, millions more out of their homes, jacking up credit card rates and fees and forcing millions more into bankruptcy — exactly what have these elite financial executives actually done to make that kind of money?
One thing they’ve done is to take hundreds of billions of tax dollars in bailout money.
Lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation, according to data compiled from disclosure forms filed with Congress.
The biggest spender was JPMorgan Chase & Co., whose lobbying budget rose 12% to $6.2 million, enough for the firm to have more than 30 lobbyists working for it. Among other banks, spending on lobbying rose 27% at Wells Fargo & Co. and 16% at Morgan Stanley.
“I have never seen such a scrum of bank lobbyists as I have in the last year — and I’ve worked on quite a few bank issues over the years,” said Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, a coalition of state consumer organizations. “It seems like everybody is out of work except for bank lobbyists.”
Americans for Financial Reform is a new national coalition of more than 200 organizations including Working America — groups that are fighting back against the big banks, credit card companies and their lobbyists. A new ad from several coalition partners is being aired:
It’s time to send a message to the big banks and the credit card bonus crowd. Tell them it’s their Final Notice - Payment Past Due. Your message will tell the Senate it’s time to enact a financial crisis responsibility fee on the biggest banks and establish a Consumer Financial Protection Agency to hold Wall Street accountable.
A year ago Wall Street’s financial rupture sent the economy hurtling into a massive crisis, crushing tens of millions of Americans in an avalanche of unemployment, underemployment, home foreclosures, reduced incomes and lost benefits. That financial rupture was caused by a combination of rapacious, mindless greed on Wall Street, the then-bloated housing bubble, and the failure of both regulators and of the financial regulatory structure.
Tomorrow the Senate Banking Committee will begin to take up Senator Chris Dodd’s (D-CT) proposals for sweeping financial regulatory changes. In a statement announcing the proposed legislation last week, committee chairman Dodd said:
“Over the past year, Americans have faced the worst financial crisis since the Great Depression. Millions of Americans have lost their homes, their jobs, and their savings – and yet, they’ve watched some of the people and institutions that caused this mess collect million dollar bonuses and receive billion dollar bailouts.”
“Those hard working Americans are asking, what is the government doing to ensure their economic security?”
“It is the job of this Congress to restore responsibility and accountability in our financial system to give Americans confidence that there is a system in place that works for and protects them.”
“We must create a sound foundation to grow the economy and create jobs.”
“The financial crisis exposed a financial regulatory structure that was the product of historic accident, created piece by piece over decades with little thought given to how it would function as a whole, and unable to prevent threats to our economic security.”
“For decades, Washington has failed to deliver the substantial reform we need. If we fail again this time, our economy will be vulnerable to another crisis.”
Both the Obama Administration and the House Financial Services Committee have developed separate regulatory reform plans. But in the view of most observers, Dodd’s proposals would go much further in establishing a fundamentally new regulatory structure and in imposing tighter controls on financial institutions, investment instruments and trading practices — particularly for derivatives.
In a statement released by the Senate Banking Committee, and at his press conference, Dodd marked his determination to succeed with this major regulatory overhaul:
“I will not stand for attempts to protect a broken status quo, particularly when those attempts are made by some of the same special interests who caused this mess in the first place.”
“The American people have been through a lot over the past year. I hear from them every day. They are business owners forced to shutter their doors and lay off workers because their credit dried up. They are senior citizens who have delayed their retirement because their 401(k) vanished. They are ordinary Americans who did nothing wrong, but are paying a steep price. They deserve an economy in which Americans can find jobs, manage their money, and build better futures for their families. They deserve the real and meaningful change in this bill.”
Discussing two of the most critical components of his plan, Dodd continued:
“Our plan will stop abusive practices by creating an independent Consumer Financial Protection Agency with one mission: standing up for consumers. Whether taking out a mortgage, getting a credit card, or investing for retirement, Americans deserve to receive clear and accurate information, to be protected from hidden fees and abusive terms, and to know that the financial products they’re being offered are safe.”
“We will end “too big to fail.” We cannot allow the collapse of a few firms to threaten our entire economy. Our plan will create an independent council of regulators to identify risks, so that government can act to prevent a crisis. We will have a mechanism in place to safely shut down large failing companies without destabilizing the financial system. No longer will the Federal Reserve’s emergency lending authority be used to prop up a failed institution.”
Other key provisions would create a single federal banking regulator; eliminate regulatory gaps for over-the-counter derivatives, hedge funds, asset-backed securities, and payday lending; require companies that sell mortgage-backed securities to keep “skin in the game” so investors won’t be sold worthless securities; and give shareholders a greater say in how executives are compensated.
Not surprisingly, the two biggest defenders of the financial status quo are not at all happy with Dodd’s regulatory reform plan. The American Bankers Association immediately attacked the Dodd plan saying it “would tear apart the existing regulatory structure only to create a new one”. And the U.S. Chamber of Commerce has launched an effort to kill the proposed Consumer Financial Protection Agency (CFPA). These and other powerful special interests and financial industry lobbyists will no doubt be working feverishly to kill Dodd’s reform plan outright, or slice and dice it until its substantative provisions are eliminated or fundamentally weakened.
