As more taxpayer money gets funneled into the banking industry, calls are increasing for greater restrictions on the payouts that bank employees — and not just the senior officers — take home.
The Obama administration is expected to announce tougher restrictions on executive compensation as early as this week for banks that receive money from the federal government's $700 billion Troubled Asset Relief Program, or TARP. When the program was introduced in October, the government placed loose restrictions on payouts for the top five executives at banks that receive TARP money, saying those officers cannot receive "golden parachute" severance payments and that their bonuses can be revoked under so-called "clawback" provisions.
Last month, the Treasury issued stricter rules concerning banks' record-keeping of executive compensation. It also told Charlotte's Bank of America Corp. and New York's Citigroup Inc., which have each racked up $45 billion in TARP loans, that they must submit their executive compensation plans for federal approval.
BB&T Corp. of Winston-Salem is among the latest big banks to abate bonuses. The company announced Friday it would not pay bonuses to the 10 members of its executive team. Though the bank earned a profit of $1.5 billion last year, it didn't meet certain targets such as earnings-per-share goals.
So far, the government has not placed any restrictions on the payments of lower-level employees. But Friday, Sen. Claire McCaskill, a Democrat from Missouri, introduced a bill prohibiting TARP recipients from paying any employee more than the U.S. president's salary of $400,000, including bonuses and options. The Wall Street Journal reported Monday that the White House may require TARP recipients to shrink the bonus pool for their top 50 executives. And a bill called the TARP Reform and Accountability Act, which passed the House last month but which is expected to die in the Senate, would prohibit bonuses for the 25 highest-paid employees at any bank that receives TARP money. The bill also would limit banks' ownership of private aircraft.
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