For Immediate Release
Kucinich Continues Investigation of Bail-Out Bonuses
Requests Full Committee Resources to Be Used
WASHINGTON - Congressman Dennis Kucinich, Chairman of the Subcommittee on Domestic Policy is pressing his efforts to head off an avalanche of Wall Street bailout bonuses. Recent reports indicate bonuses and other compensation packages paid by financially troubled firms receiving government assistance could reach into the tens of billions of dollars.
Today he released a letter sent to Congressman Henry Waxman, Chairman of the Committee on Oversight and Government Reform, asking that the Full Committee move quickly to investigate how bailout funds are being spent by the financial service companies participating in Treasury's capital purchase program.
"It would be an affront to taxpayers and shareholders alike if Wall Street executives cashed in on the bailout. We must prevent the diverted directly or indirectly of bailout funds to bonuses and exorbitant compensation packages," he said.
Congressman Kucinich, an opponent to the bailout, has been a leader in calling for stringent oversight on money spent through the bailout program. He asked for the leadership of the Full Committee to ensure that the resources necessary to investigate are available. The Subcommittee will remain a key part of the investigation.
Congressman Kucinich recommended that the Full Committee begin by requesting specific information from each of the 11 companies participating in the Treasury's Capital Purchase Program (Bank of America, Citigroup, J.P. Morgan Chase, Wells Fargo, Morgan Stanley, Goldman Sachs, Merrill Lynch, Bank of New York Mellon, State Street, City National, and Key Bank). The information requested would include compensation data since 2003, descriptions of 'claw back' policies, an itemized list of funds received from government sources, A list of every party who has purchased more than $50 million of impaired assets in the past 24 months, and a description of each organizations risk management procedures.
"I believe that the American taxpayers who have provided this subsidy have legitimate concerns about how those companies will use those funds, what happened to require them to need those funds, and what they will be doing differently in the future to ensure that they will not need more assistance," wrote Kucinich in the letter.
The full text of the letter follows:
October 27, 2008
Henry A. Waxman, Chairman
Oversight and Government Reform Committee
2157 Rayburn HOB
Washington, DC 20515
I am writing to ask that the Full Committee move quickly to conduct oversight on the use of Federal monies by financial service companies participating in the Treasury's Capital Purchase program. As you know, Treasury has set aside $250 billion for buying preferred equity in a number of national and regional financial institutions with funds authorized by the Emergency Economic Stabilization Act of 2008, passed recently by Congress.
While the ostensible purpose of these purchases is to increase lending by these institutions, it is not a requirement. Indeed, these companies are arguably free to spend these funds, or existing funds freed by the federal cash infusion, for any purpose, including payment of bonuses and extravagant compensation earned during the period preceding the bailout.
I believe that the American taxpayers who have provided this subsidy have legitimate concerns about how those companies will use those funds, what happened to require them to need those funds, and what they will be doing differently in the future to ensure that they will not need more assistance. Furthermore, this matter requires the urgent attention of the Committee, since the recipients of the federal monies can be expected to commit those funds immediately.
In view of the urgent nature of this matter, I will commit the resources of my subcommittee to follow the lead of the Full Committee in this investigation and assist in any way requested. I suggest that the Committee begin by requesting the following information from each of the 11 companies participating in Treasury's Capital Purchase program (Bank of America; Citigroup; J.P. Morgan Chase; Wells Fargo; Morgan Stanley; Goldman, Sachs; Merrill Lynch; Bank of New York Mellon; State Street; City National, and Key Bank):
1. A breakdown of the total annual compensation paid since 2003 through the present, including plans to pay compensation and bonuses in the near future for performance prior to the capital purchase; to each employee whose total annual income exceeded $500,000. They should be asked to name the top five executives and break down their compensation packages. (They should include executive level employees who are no longer employed by the company). They should be asked to aggregate figures for the remaining individuals receiving over $500,000, by placing them into the following groups: over $1,000,000, between $750,000 and $999,999, and between $500,000 and $749,999. Total annual compensation should mean: salary, bonus, other compensation, the value of restricted stock awards, long-term incentive payouts and the value of stock option awards in the fiscal year. Other compensation includes perquisites and other personal benefits; amounts accrued pursuant to a termination or change in control plan; annual company contributions to vested and unvested pension plans; the dollar value of any insurance premiums paid by the company with respect to life insurance for the benefit of an employee; gross-ups or other reimbursements for taxes; and discounted securities purchases.
2. A description of any policies in place that dictate the circumstances in which the company will seek to recoup, "clawback", compensation paid to employees in the event of a significant restatement of financial results or significant extraordinary write-off. If the company has entered into indemnification agreements or purchased insurance on behalf of certain employees to shield them from personal losses resulting from clawback obligations, they should be asked to explain the terms of such agreements or policies; limits, if any, on the amount that may be reimbursed to the company on behalf of the employment; the applicable standard of conduct that will override the agreement or insurance; and each individual who is covered by such agreements or insurance.
SCROLL TO CONTINUE WITH CONTENT
Progressive independent media doesn’t exist without support from its readers.
There’s no way around it. No ads. No billionaires. Just the people who believe in this mission and our work.
If you believe the survival of independent media is vital to do the kind of watchdog journalism that a healthy democracy requires, please step forward with a donation to non-profit Common Dreams today:
3. An itemized list of all government funds they have received since January 1, 2007 through Treasury programs. the anticipated benefit they expect to recognize as a result of the tax change enacted in Section 301 of the Emergency Economic Stabilization Act of 2008, participation in any Federal Reserve liquidity facility created after January 1, 2008, interest payments they have received from the Federal Reserve, and loans they have received to purchase assets from pooled investment vehicles under their control.
4. A list of the types of collateral they have pledged to each of these facilities and the value they received in exchange, if their institution has accessed any of the primary dealer credit facilities. They should indicate the aggregate value they have received each month in exchange for each type of collateral including treasury securities, agency securities, AAA-rated mortgage-backed, AAA-rated asset-backed securities, investment grade corporate securities, investment grade municipal securities, investment grade mortgage-backed securities, and investment grade asset-backed securities.
5. A list of every party who has purchased more than $50 million of impaired assets from their organization in the past 24 months and any financing they have provided.
6. An explanation of why the institutions participating in the Capital Purchase program need government aid. They should describe their business strategy going forward and how it differs from the strategy that has made it necessary for them to accept government aid.
7. A description of the organization's risk management procedures before they received government aid and the improvements they have made in light of the consequences to their organization of the financial crisis.
This would be a logical extension of the recent oversight conducted by the Full Committee on executive compensation and key actors in the financial crisis.
Dennis J. Kucinich
Domestic Policy Subcommittee
cc: Darrell Issa
Ranking Minority Member
This is the world we live in. This is the world we cover.
Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news outlet. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do. Without Your Support We Won't Exist.
Please select a donation method: