Platinum Parachutes
Congressman Henry Waxman (D-California) has been eliciting some really interesting testimony in hearings before the House Oversight and Government Reform Committee, which he chairs. He called Lehman Chief Executive Richard Fuld to Capitol Hill to testify as to just what happened in the days leading up to the crisis which led to the $700 billion bail out. Mr. Fuld described the tsunami of factors which wiped out the investment firm, but he also revealed some other factors in the way Lehman and the other Wall Street investment banks operated.
From the Los Angeles Times:
Just days before Lehman Bros. Holding Inc. filed for bankruptcy protection last month, the company sought $23.2 million in "special payments" for three outgoing executives, according to internal documents released by a congressional committee Monday. ...
"None of us ever gets the opportunity to turn back the clock," Fuld said. "But with the benefit of hindsight, would I have done things differently? Yes, I would have."
But the explanation wasn't good enough for Waxman, who slammed Fuld for earning $484 million in salary, bonuses and stock sales since 2000.
"Your company is now bankrupt, our economy is now in a state of crisis, but you get to keep $480 million," Waxman said, displaying yearly compensation figures on large TV screens in the hearing room. "I have a very basic question for you. Is this fair?"
Fuld said that the figures weren't accurate and that he probably received "a little bit less than $250 million -- still a large number, though."
$250 million is a very large number when it comes to compensating the chief executive of a firm which failed under his direction. Still, it's nice to see that the chief executive realizes that it's a large number. Frankly, I get the impression that he's quite proud of the fact that he was worth that kind of green.
The part that is equally as disturbing, however, is that even as Lehman Bros. was preparing to file bankruptcy, Fuld and his colleagues were busy giving away millions of company assets to the executives who were moving on to their next job.
What really outrages me is that this hearing and the testimony elicited came after Congress committed the $700 billion to those companies. Treasury Secretary Paulson really outplayed Congress (and us all) by insisting that the money get pledged first, the questions would just have to wait. When Congress briefly demurred and suggested executive compensation restrictions be included in any such package, Paulson howled that such restrictions just wouldn't work, that executives would not stand for it. So the restrictions included in the bill were watered down. After all, nobody wants to upset the wunderkinds of Wall Street.
A pox on all of their houses.
From the Los Angeles Times:
Just days before Lehman Bros. Holding Inc. filed for bankruptcy protection last month, the company sought $23.2 million in "special payments" for three outgoing executives, according to internal documents released by a congressional committee Monday. ...
"None of us ever gets the opportunity to turn back the clock," Fuld said. "But with the benefit of hindsight, would I have done things differently? Yes, I would have."
But the explanation wasn't good enough for Waxman, who slammed Fuld for earning $484 million in salary, bonuses and stock sales since 2000.
"Your company is now bankrupt, our economy is now in a state of crisis, but you get to keep $480 million," Waxman said, displaying yearly compensation figures on large TV screens in the hearing room. "I have a very basic question for you. Is this fair?"
Fuld said that the figures weren't accurate and that he probably received "a little bit less than $250 million -- still a large number, though."
$250 million is a very large number when it comes to compensating the chief executive of a firm which failed under his direction. Still, it's nice to see that the chief executive realizes that it's a large number. Frankly, I get the impression that he's quite proud of the fact that he was worth that kind of green.
The part that is equally as disturbing, however, is that even as Lehman Bros. was preparing to file bankruptcy, Fuld and his colleagues were busy giving away millions of company assets to the executives who were moving on to their next job.
What really outrages me is that this hearing and the testimony elicited came after Congress committed the $700 billion to those companies. Treasury Secretary Paulson really outplayed Congress (and us all) by insisting that the money get pledged first, the questions would just have to wait. When Congress briefly demurred and suggested executive compensation restrictions be included in any such package, Paulson howled that such restrictions just wouldn't work, that executives would not stand for it. So the restrictions included in the bill were watered down. After all, nobody wants to upset the wunderkinds of Wall Street.
A pox on all of their houses.
Labels: Corporate Welfare, Economy
posted by Diane at 3:45 AM
2 Comments:
When bear-sterns went bust this summer, many people wrote that lehman would be next. There should have been no surprise in this. Questioning the fox as he wipes chicken feathers from his snout is hardly 'oversight'. Waxman and Frank are professional talkers, but when it comes to protecting the public from these villians, they've been conspicuously absent. Scolding the recently sated fuld is too little, too late. He should have been thwarted before he sat down to dine.
Maybe a minor semantic point, or maybe not -
But the explanation wasn't good enough for Waxman, who slammed Fuld for earning $484 million in salary, bonuses and stock sales since 2000
Why does everyone seem to uncritically use the word "earned" when they talk of the money these guys took. When I had a job I earned my $20/hour by diligently working to design products that would work reliably and please our customer thereby helping my employer to be profitable. How on earth could anyone 'earn' $500,000,000 dollars? What could they do that is so bleeding special that entitles them to that incredible 'reward'? Especially if they ran their company into the ground and wound up needing $100,000,000,000 of taxpayer money to rescue them from their self-created mess?
You can 'earn' $100,000 a year. You don't 'earn' $100,000,000 a year, you 'take' it, you're 'rewarded' w/it, you're 'granted' it, you 'loot' it, maybe you even 'steal' it. But you sure as hell didn't 'earn' it, at least not honestly.
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