Pay czar won't fight big banks
He said he would not try to recoup $1.6 billion in compensation to executives at firms the U.S. bailed out.
WASHINGTON - For all his tough talk about excessive pay for bankers, the Obama administration's pay czar let the executives go without a fight.
Kenneth Feinberg said Friday that he would not try to recoup $1.6 billion in compensation given to executives at banks bailed out by the government because he thought shaming them was sufficient.
His decision to go easy on 17 banks that made "ill-advised" payments to their executives is likely to fuel concerns about how he will oversee the $20 billion oil spill compensation fund created by BP related to April's spill in the Gulf of Mexico.
"I'm not suggesting we should blink," Feinberg said in an interview. "The question is: At what point are you piling on and going beyond what is warranted?"
He does not have the authority to force the banks to repay the compensation money, but the law instructed him to negotiate with banks to return money if he determined that the pay packages were "contrary to the public interest" - language that he opted not to use.
Still, his leniency is a far cry from the bravado he displayed in the months leading up to his final act as pay czar. In February, he spoke with confidence about his ability to get companies that received help to accept less in executive compensation.
Among the firms he did not pursue were two whose bailouts are expected to cost taxpayers $38 billion: American International Group Inc. and CIT Group Inc.
He also ignored pay at Wall Street powerhouses such as Goldman Sachs Group Inc. and JPMorgan Chase & Co., which reaped massive profits from the 2008 government efforts to stabilize the financial system. Those firms have repaid the government.
Feinberg said a fight with those banks could have exposed them to lawsuits from shareholders trying to recapture the executives' money, and he did not think that would be fair.
Sen. Bernie Sanders (I., Vt.) said he was disappointed that Feinberg decided there was no way to force the banks to return the bonus payments.
"These people's jobs were saved by the taxpayers of this country, and their response was to give themselves these huge bonuses," Sanders said.