Today it’s Vikram Pandit of Citibank’s turn, and he gets a “twofer.” Mr. Pandit announced recently that Citibank has turned around and begun to show a profit. And he talked proudly of how he was being responsible and taking a much lower salary of only $1 million. Great, we thought, now he can start repaying the loans we taxpayers gave him.
But, no. Wrong on both counts. Seems he was fudging the facts on the salary — that he was earning something north of $5 million. Those pesky bonuses, I suppose. Frankly, I don’t care what you call it — salary, bonus, deferred compensation, whatever — it’s all money going from the Citibank (and our) coffers into his personal one.
And today, like John Thain, our first award winner, Pandit is treating himself to a pricey renovation of his executive office suite — a renovation that makes Thain’s look like a bargain. Citibank has taken out permits for the basic construction portion of the refurb –permits that indicate over $3 million just for things like moving and removing walls, plumbing, fire safety. And that’s way before the really pricey stuff like rugs, furniture, and yes, trash cans.
I’m sure all those recently laid-off Citibank employees are just thrilled to know that Citibank is once again turning a profit. I wonder how many of them are renovating their offices or their homes these days. Mr. Pandit, I don’t begrudge you a spiffy new office — AFTER YOU’VE PAID ME BACK! The construction industry could use the jobs, but if you have $10 million to spend on your office re-do, you certainly can afford to use some of Citibank’s recent profits to start repaying the American taxpayers. And that money should be repaid before you even start thinking of new digs.
Do these guys not read the newspapers or watch TV? Do they still not realize the degree of taxpayer rage at their arrogance? Is it time to grab the pitchforks and torches and man the barricades yet? Vikram Pandit, you’ve been awarded the “Let them Eat Cake” award.
There are enough of these guys that we could set up a March Madness Bracket of 65 of Wall Street thieves.
Congress had plenty of time to limit (control) how they wanted the money spent when they wrote the law that handed it out. You can’t dictate to the people in the finacial industry how to spend the money after you give it to them any better than you can dictate to the victims of Katrina how to spend their $1000.00 debit card. (Recall the stories about people spending their government [ tax payer] provided debit card on $900.00 Gucci purses instead of what the money was actually intended for?)
Look, I am the first to admit that paying bonuses and redecorating your office is not the smartest thing to do when you have just gotten a big wad of money from the government, but if there weren’t any restrictions (or requirements) on how the money was to be spent there is little we can do about it once it is spent.
There are people who don’t trust homeless people begging for money for food that they will actually use the money for food, rather than on a bottle at the State Store, so they give them food or a gift card to a restaurant. Why wouldn’t we do the equivalent with nearly $2 trillion of tax payers money?
And before some one comes back and says that it isn’t the new President’s fault that there weren’t any restrictions placed in the TARP bill, that it was all the responsibility of the previous administration, let me remind you that the new President was a member of the Congress that wrote that TARP bill. If he didn’t like that there weren’t restrictions in it, he shouldn’t have voted for it.
Paulson came to Congress last September, with a 2 1/2 page proposal that contained absolutely zero oversight or recourse. In effect he was asking to be made Master of the Universe. The (Bush) Administration nixed the idea of any caps or restrictions on executive compensation. The claim was that the money would be used to buy toxic assets, but as soon as the bill was signed, the administration in power (Bush) turned around and used it to re-capitalize the banks. Congress, suspecting that Bush and Co couldn’t find their way out of a paper bag on the economy (remember, Bush had a history of failed businesses while in the private sector), opted to release only half of the funds immediately. The second half has far more restrictions, though clearly still not enough. When the TARP bill was passed, President Obama had but one vote of 100 in the Senate and no vote in the House. To try to blame him that there weren’t adequate restrictions (regulations???) is disingenuous at best.
I’m amused that you suggest the equivalent of gift cards to try to control how the TARP funds are spent, since those would clearly entail regulation and oversight. Are you rethinking your ideas about the role of regulations in a free market?
No I am not re-thinking my view of regulation. But when you are the one supplying some one with money you have the right to control how it is spent, so long as those regulations are given up front. You cannot give some one money and then get upset about how they spent it if you didn’t say how it was to be spent. And getting every one fired up at the executives who were given contractually mandated bonuses, when you had the authority to control those bonuses before you gave AIG (and others) the money, is truly disingenuous.
As for Senator Obama’s ability to stop the TARP bill, he definitely could have. One Senator has more ability to keep a bill he disagrees with from passing than one House member does, or the President of the United States does. One Senator can filibuster the bill and keep it from passing. But I don’t blame him for the bill passing. In truth, he would have had to completely suspend his campaign to keep it from passing, or the leadership would have just postponed the vote until he left town. But at least he would have been on record opposing the bill with out restrictions.
What you’re really objecting to is regulation after the fact.
However, had there been better controls in effect over the past decades, we wouldn’t even need to be having this discussion. The insurance companies, investment banks and commercial banks would have remained separate entities. But three GOP Senators (Gramm-Leach-Bliley) decided that it would be just great to allow them to become uber-financial entities. Now, they are deemed too big (and too interwoven into the entire economic system) to fail.
The root of this problem is the foreseeable consequences of de-regulation. If regulations are so bad, and people will simply do the right thing, then let’s do away with all laws and regulations. If you don’t think that would work, then we need regulations in order for the financial sector to work properly.
Deregulation coupled with lax or non-existent oversight is what allowed unscrupulous people to cause the S&L fiasco. They allowed Enron and MCI/Worldcom and others to be controlled by unscrupulous people who chose to treat their publicly-owned corporations as their personal fiefdoms, passing on the risk to their stockholders and employees while siphoning the corporation’s assets for their personal benefit.
I agree with you MLTH: “Deregulation coupled with lax or non-existent oversight is what allowed unscrupulous people to cause the S&L fiasco. They allowed Enron and MCI/Worldcom and others to be controlled by unscrupulous people who chose to treat their publicly-owned corporations as their personal fiefdoms, passing on the risk to their stockholders and employees while siphoning the corporation’s assets for their personal benefit.”
I want regulation because letting the free market regulate itself has been a disaster because it doesn’t happen, as Paul Volcker acknowledged. Can anyone still argue deregulation with a straight face?