News Release

Welcome to the first of U.S. PIRG’s periodic Bailout Briefings on the financial industry bailout. The aim is to provide our perspective on recent developments and resources for the media, staff and other interested parties.

The first Bailout Briefing focuses on comparing executive compensation approaches, including the provisions of the newly-enacted law (as part of the Recovery package).

Summary

It’s no secret that as many of the bailed-out financial institutions endured catastrophic losses, Wall Street executives and employees took in over $18 billion in bonuses. And this may be a conservative estimate. The CEOs’ own testimony to Congress highlighted the critical disconnects between Wall Street “strategy” and Main Street impact. 

The good news is that Congress passed and the President signed into law, limits on “shameful” bonuses, limits that apply to all of the bailed-out firms. And the limits are retroactive – so all of the Wall Street titans would have to comply. Some lobbyists indicated that this move “undermines the current incentive structure." Seeing as the current incentive structure was a major contributor to the risky decisions that got us here, undermining it may be what is needed. However, the details on the implementation of these measures and how they will be reconciled will be critical to their success in achieving their intended goals. U.S. PIRG provides a detailed breakdown of Secretary Geithner’s proposal, the new law and other pending legislation on executive compensation in the table below. We also include potential loopholes and list outstanding questions. In future Bailout Briefings, we will provide updates on how the Geithner guidelines will be adapted into the new law, which could take up to a year to be fully implemented.