Boy oh boy, I bet those Wall Street gazillionaires were sweating like PIGS when Congress was barking up a storm that the No Banker Left Behind Act was for Main Street, not Wall Street.
Luckily, the top dog at Goldman Sachs won't be sleeping in his chauffeured limo anytime soon. Whew!!!
These poor souls! How can anyone expect to get by on a paltry $70 MILLION dollars a year, that's outrageous. They should be getting paid BILLIONS, like the astute John Paulson, who is eeking out a living on only 3.7 BILLION dollars from his Wall Street 2007 salary.
Poor Mr. BLANKFEIN, he'll probably have to sell one or two of his mansions to make ends meet. Maybe we should take up a collection, ya' think?
Gosh, I wonder where the current Secretary of the Treasury, Hank Paulson, will go after his term ends early next year.
Hmmm, wonder where?
By Ian Katz and Rebecca Christie
Oct. 15 (Bloomberg) -- Goldman Sachs Group Inc.'s Lloyd Blankfein, whose $70.3 million paycheck made him Wall Street's most highly compensated chief executive officer last year, could still earn tens of millions annually under the bank-rescue plan run by his former boss, Treasury Secretary Henry Paulson.
Executive-pay packages will be restricted for the nine banks receiving a $125 billion infusion of U.S. funds to restart lending, said Paulson, who earned $37.8 million in 2005, his last full year as Goldman's CEO. The investment is part of a $700 billion bailout plan approved by Congress this month.
Blankfein, 54, was Wall Street's best-paid CEO in 2007, according to data compiled by Bloomberg. He ``could still make tens of millions of dollars if he continues to receive stock grants and Goldman's stock rises,'' said David Schmidt, a senior consultant for New York-based compensation firm James F. Reda & Associates.
Concerns over public reaction will likely prevent the bank from maintaining the CEO's compensation at last year's level, Schmidt said. Goldman Sachs fell $4.63, or 3.8 percent, to $118.27 at 10:16 a.m. today in New York Stock Exchange composite trading. The shares have fallen 45 percent this year.
Paulson, who now earns $191,300 annually, is limiting corporate-tax deductions on compensation to the CEO, chief financial officer and the next three highest-paid executives of participating banks to $500,000.
While performance-related pay over $1 million has been tax- deductible, companies were able to write off only $1 million of salary since 1993.
Car and Driver
As a result, bankers' salaries were often set beneath the $1 million cap. Blankfein's was $600,000 last year, with the rest of his package coming in incentive compensation and services, including a car and driver, according to regulatory filings. Goldman Sachs spokesman Michael DuVally declined to comment.
``This is the first time in American history that the federal government has applied restrictions on the compensation that goes to top executives,'' House Financial Services Committee Chairman Barney Frank said in a statement. ``We will be watching how the Treasury implements these important provisions to ensure that the restrictions are binding and enforceable.''
The Treasury's stock-buying program will begin with nine banks, which the agency didn't name. People briefed on the matter said $125 billion will be disbursed in days.
Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. will each get $25 billion, the people said. A combined Bank of America Corp. and Merrill Lynch & Co., which the Charlotte, North Carolina-based lender is taking over, will also receive $25 billion. Morgan Stanley and Goldman Sachs will get $10 billion apiece.
Bank of New York Mellon Corp. said it will receive about $3 billion and State Street Corp. said it's getting $2 billion.
Excessive executive compensation is a ``legitimate complaint'' that needs to be addressed, JPMorgan CEO Jamie Dimon said at Harvard Business School in Boston yesterday. ``There were people who made a lot of money who didn't deserve it. That's a fact,'' said Dimon, 52, who was paid a $1 million salary and total compensation of $27.8 million last year, according to a regulatory filing.
``I don't think there's anything in these rules that will affect their pay,'' said Sarah Anderson, a director at the Institute for Policy Studies, a Washington-based research group backed by Democrats. Companies will likely maintain current compensation levels and ``just take the hit on the tax bill,'' she said.
`Not an Issue'
For banks that are losing money ``and not paying any taxes, this will not be an issue,'' said Dean Baker, co-director for the Center on Economic and Policy Research, a Washington-based research group. Citigroup, the biggest U.S. bank by assets, had a second-quarter net loss of $2.5 billion, or 54 cents a share. It's forecast to lose $1.77 a share for the full year, according to a Bloomberg survey of eight analysts.
Paulson, 62, will bar companies participating in the stock- purchase program and Treasury purchases of toxic bank assets from offering so-called golden parachutes. Severance of more than three times an executive's base pay won't be tax-deductible for the company, and the recipient will be subject to an extra 20 percent tax on the money, according to the Treasury.
Measures such as the golden-parachute provision are meant to protect the government in its role as the banks' business partner, said Nell Minow, editor of Corporate Library, a Portland, Maine-based corporate-governance research firm.
Congress is likely to ``revisit the issue as we better understand'' what led to the financial crisis, Minow said.
The government will be able to retrieve bonuses and incentive pay that executives already received ``based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate,'' the Treasury said in a statement today.
Such clawback provisions would be more effective if they were ``applied to performance of the company in the medium- and long-term, not a material inaccuracy,'' said David Lewin, a professor at the UCLA Anderson School of Management.
U.K. Prime Minister Gordon Brown on Oct. 13 won promises from Royal Bank of Scotland Group Plc, HBOS Plc and Lloyds TSB Group Plc to lend more at lower rates and stop paying dividends in return for a 37 billion-pound ($64 billion) rescue. Chancellor of the Exchequer Alistair Darling said he wants to cut the bonuses of top executives who led their banks into trouble.
German Finance Minister Peer Steinbrueck, whose government will provide as much as 500 billion euros to banks through capital injections and loan guarantees, wants executive pay to be limited to 500,000 euros ($678,300) annually, he said in Berlin yesterday.
Managers should receive ``no bonuses, no severance pay during this time and no dividends,'' he said.
Uhh, Mr. Steinbrueck, I applaud your courage and common sense approach to this mess, but have you heard of a man called Jorg Haider? Just wondering.--MORE--"