Bailed-out banks: Meet the pay czar
[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/08/13/art.feinberg0813.gi.jpg caption="Obama pay czar Kenneth Feinberg is expected to weigh in on some pay packages in the next 60 days."]
NEW YORK (CNNMoney.com) - Just how much is a rainmaker at a bailed-out bank really worth? Or a senior executive at a recently bankrupt automaker for that matter?
Such questions will soon be a subject of discussion at the White House as the biggest recipients of government aid begin submitting compensation plans for their top 100 employees to the Obama administration's recently appointed pay czar.
Seven companies - AIG, Chrysler, Citigroup, Chrysler Financial, Bank of America, General Motors and GMAC - are due to submit proposed employment contracts for their 25 highest-paid employees Friday. Compensation proposals for the next 75 most compensated employees are due by Oct. 13.
Kenneth Feinberg, the man charged with handling the task, is expected to rule on the first set of pay plans within the next 60 days. That information is due to be made public by Treasury sometime after, although any announcement may not include details of pay packages for individual employees.
Feinberg, a Washington attorney who first entered the public spotlight after overseeing compensation payments to September 11 victims, has already met with the seven firms to discuss some of the employee payment plans.
However, details of those talks have remained mostly under wraps, although there have been indications of a lot of back-and-forth between Feinberg's office and the institutions.
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'Say on pay' moves full speed ahead
NEW YORK (CNNMoney.com) - It may not be long before shareholders have more control over how much money top executives across the country make.
This week, both the Senate Banking Committee and the House Financial Services Committee are tackling the issue of "say on pay" - which would allow investors to vote on compensation packages.. Experts think Congress could soon pass such legislation and have it on President Obama's desk as early as this fall.
"Unless there is something that takes executive compensation out of the headlines, I think it is likely these provisions will become law," said Michael Melbinger, a lawyer at Winston & Strawn, who serves as chair of the firm's executive compensation practice.
From exorbitant salaries to outsized bonuses, corporate compensation practices have remained a lightning rod of criticism from lawmakers and taxpayers for much of this year.
Lawmakers propose putting an end to TARP
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/06/15/art.thune.gi.jpg caption="Sen. John Thune is among lawmakers calling for an end to TARP."]NEW YORK (CNNMoney.com) - For some, the slow, steady demise of TARP cannot happen soon enough.
Last week, 10 of the nation's largest financial firms won their release from the Treasury Department's Troubled Asset Relief Program, setting the stage for them to pay back the billions of dollars the government loaned them last fall.
But this news was book ended by two pieces of proposed legislation from members of the House and the Senate, both of which aim to end the controversial program sooner rather than later.
Rep. Jeb Hensarling, R-Texas, whose proposal would effectively shutter TARP by year's end, would prevent the Treasury Department from using any of the TARP money returned by banks to lend back out to other struggling firms.
Banks: Take my TARP. Please!
[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/POLITICS/02/25/bank.party/art.northern.trust.gi.jpg caption="Asset manager Northern Trust told members of Congress last month that it wanted to repay the $1.57 billion in government funds as quickly as prudently possible."]
NEW YORK (CNNMoney.com) - Taxpayers hate the bank bailout. Lawmakers too. And now it looks like some of the bailed out banks themselves are starting to get fed up with it as well.
Just weeks after Congress removed a key hurdle that prevented banks from paying back funds from the Troubled Asset Relief Program, or TARP, some banks are already queuing up with checks in hand.
So far, three banks have formally declared their intentions to pay back the government. Last month, Louisiana-based IberiaBank Corp. (IBKC) said it would return $90.6 million while TCF Financial (TCB), a bank headquartered just outside of Minneapolis announced last week it was returning $361.2 million.
On Tuesday, New York City-based Signature Bank (SBNY) became the latest, announcing at a conference it had filed notice with the Treasury Department to pay back $120 million in TARP funds.
This list doesn't include the dozens of institutions that were approved for government aid, but subsequently decided to turn down the money. New Jersey-based lender Sussex Bancorp (SBBX) added itself to that group after it withdrew from the program last week.
But even more banks are poised to return TARP money, including some of the nation's largest.
U.S. takes another crack at AIG rescue
[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/03/02/art.aig0302.gi.jpg caption="AIG lost more than $60 billion in the fourth quarter of last year."]
NEW YORK (CNNMoney.com) - Insurance giant American International Group reported a stunning $62 billion quarterly loss on Monday, while government officials unveiled their latest efforts aimed at preventing the collapse of the firm.
Overwhelmed by ongoing deterioration in the credit markets and charges related to its restructuring, AIG's losses overwhelmed the firm during the fourth quarter. Its $61.7 billion loss amounted to $22.95 per share.
AIG's loss for the full year was even more dramatic - $99 billion. In 2007, the company reported a profit of $9.3 billion.
To keep the company from cratering and causing broader fallout across the financial system, the government said it would overhaul its bailout, which is aimed at helping the besieged firm unwind in an orderly way.
"Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high," Treasury said in its announcement.
One main goal of the revamped rescue plan - now totaling $162.5 billion - is to help boost AIG's financial position by, among other things, reducing the interest it pays the government on its loans.
Key components of the plan included the government's decision to commit another $30 billion to the firm in exchange for cumulative preferred stock. The payment, which will come from the second half of the $700 billion rescue package enacted last fall, will not be a one-time payment but AIG will able to draw down the funds as needed to help strengthen its capital base.
Treasury unveils 'stress test' for banks
[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/02/25/art.geithner.gi.jpg caption="Timothy Geithner is Obama's Treasury Secretary. "]NEW YORK (CNNMoney.com) - The Obama administration unveiled plans aimed at assessing the health of the nation's leading lenders Wednesday, particularly banks' ability to withstand more dire economic conditions.
The so-called "stress test" program, which was first hinted at earlier this month when the White House rolled out its financial recovery plan, would require major banks like Citigroup, Bank of America and JPMorgan Chase to estimate firmwide losses for the next two years and their ability to absorb such losses.
The program would require financial institutions to offer loss projections across their entire loan and securities portfolios, using consensus economic expectations and a "more adverse" scenario in which unemployment climbs above 10% and home prices decline another 20%.
The hope is that the tests, which will focus on banks with at least $100 billion in assets, would help regulators identify which banks may require additional government support.
Regulators said they hope to complete their examinations as quickly as possible, but all determinations would be made no later than the end of April.
Shares of struggling financial giants, including Bank of America and Citigroup, remained lower following the news. Other large banks were also lower, including Wells Fargo, which declined 2%.
Many big banks have managed to eke out gains this week as top administration officials downplayed fears that the government may have to step in and take control of the country's largest financial institutions.
Bank CEOs flogged in Washington
NEW YORK (CNNMoney.com) - Top executives from eight of the nation's largest financial institutions told Congress Wednesday that they are continuing to lend, even as banks have come under severe scrutiny in recent weeks about their use of billions of dollars in government aid.
But skeptical legislators weren't buying it.
At a closely-watched hearing before the House Financial Services Committee, CEOs from such embattled firms as Citigroup and Bank of America defended their actions since taking hold of $165 billion last fall, adding that without government assistance, credit would be even harder to obtain.
"We are still lending, and we are lending far more because of the TARP program," Bank of America Chairman and CEO Ken Lewis said in his prepared remarks.
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