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| Sunil Jain: Banking on TARP |
| Sunil Jain / New Delhi Sep 10, 2009, 00:39 IST |
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If you’re wondering why the G20 finance ministers want to curb excessive banker bonuses, there’s a good reason for it. Though bank bonuses came down dramatically in 2008 — average CEO compensation at the top 20 US banks that got aid fell 30 per cent in 2008 — they still got paid a lot more than the CEOs for S&P 500 companies, companies which never got any taxpayer-funded Troubled Asset Relief Program. Average CEO compensation at these banks fell from $19.1 million in 2007 to $13.8 million in 2008 — this last figure compared with $10.1 million for S&P 500 CEOs. While we will have to await details for 2009, don’t feel too bad for the bankers. According to the Institute for Policy Studies, of the 20 financial firms that got the biggest bailout, 10 have reported the stock options given to executives when share prices were rock bottom. Thanks to government bailouts, their stock prices rose and, voila, the top five executives at nine of these banks have gained $90 bn already, and we’re not talking salaries or bonuses yet. American Express CEO Kenneth Chennault got 1.2 million options and the bailout saw Amex shares rise from $16.71 to around $32, giving him nearly $18 million. An earlier study, by New York Attorney General Andrew Cuomo, found 9 US TARP-assisted banks paid $33 bn in bonuses and got $175 bn from TARP. Goldman Sachs earned $77,228 per employee in 2008 but gave out bonuses worth $160,420 per employee, Merrill Lynch lost $467,797 per employee but gave out $61,017 per employee in bonuses.
| Bonuses awarded at nine major banks in 2008 |
| Bank |
2008 Bonus
Pool
(in $) |
Number
of
employees |
Number of bonus
payments in excess
of $1 million |
| Bank of America |
3,300,000,000 |
243,000 |
172 |
| Bank of New York Mellon |
945,000,000 |
42,900 |
74 |
| Citigroup |
5,330,000,000 |
322,800 |
738 |
| Goldman Sachs |
4,823,358,763 |
30,067 |
953 |
| JP Morgan Chase |
8,693,000,000 |
224,961 |
1,626 |
| Merrill Lynch |
3,600,000,000 |
59,000 |
696 |
| Morgan Stanley |
4,475,000,000 |
46,964 |
428 |
| State Street |
469,970,000 |
28,475 |
44 |
| Wells Fargo |
977,500,000 |
281,000 |
62 |
| TOTAL |
32,613,828,763 |
1,279,167 |
4,793 |
| Source: New York Attorney General’s Office. |
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