The executives responsible for the financial
industry's pervasive fraud are paying no personal price.
What should we, as a society, do with all those reckless
financial industry execs who helped trigger the Great Recession and the tidal
wave of foreclosures? Should we put these power suits behind bars? Or should we
forgive and forget, and lavish down upon them hundreds of millions of dollars
in new rewards?
These questions now stand answered. The Equilar executive pay
data firm recently reported that for just one year of their
post-Wall Street-meltdown "labor," the five highest-ranking execs at
18 top U.S. financial firms, taken together, pocketed stock awards now worth
nearly a half-billion dollars.
Meanwhile, not one high-profile financial industry executive has
yet seen the inside of a jail cell, despite massive instances of fraud at the
firms they've been leading.
How widespread has this fraud been? The Securities and Exchange Commission, the federal watchdog over Wall Street, has so far "collected $2.2 billion in penalties, disgorgement, and other monetary relief from cases related to the crisis," the New York Times reports.
And that total doesn't count the $26 billion settlement with
banks that the Justice Department announced last February — over
fraudulent foreclosure
practices — or any of the
$536 million in credit card company refunds and penalties the new Consumer
Financial Protection Bureau has won since July.
Not a cent of these millions and
billions has come directly out of the pockets of financial industry executives.
Millions and billions have instead been pouring into the
pockets of these execs.
Consider credit card giant Capital One. This past summer,
Capital One agreed to pay $210 million in refunds and fines
after federal regulators caught bank staff misleading customers.
Capital One’s top five execs could pay a good chunk of that $210
million from the pay they pocketed in the one year the new Equilar study has
tracked. From mid 2008 to mid 2009, these five Capital One execs received stock
and stock option awards inititally worth $19.9 million.
At that time, Capital One shares were selling at
bargain-basement prices. Since then, the entire stock market has rebounded,
Capital One shares included. Equilar puts the current value of those stock and
options at $114 million.
The five execs, says a flack for Capital One, deserve all
that reward. They "delivered solid results in 2009."
Solid as smoke and mirrors. The five execs ran a company that
bamboozled consumers. They parlayed a huge stock market rebound — fueled by
taxpayer-financed bank bailouts — into immense personal windfalls.
But let's not dwell on just Capital One. American
Express recently agreed
to pay $112.5 million in refunds and fines. The company, regulators found, has
been charging illegal fees and reneging on discounts promised to consumers.
At the stock market low point in 2009, notes Equilar, Amex
generously stuffed the pockets of its top five execs with options then worth
$7.6 million. The current value of these options: $91.4 million.
Some of these execs, we now know, ran companies guilty of
massive fraud. So why should we expect, asks consumer advocate Dennis Kelleher,
anything but widespread fraud?
"If you are an executive," he notes, "you know that the chances of getting
caught are infinitely small, and the chances of getting caught and prosecuted
are even smaller."
On Wall Street and elsewhere in corporate America, crime clearly
pays. Back in the Great Depression, curiously enough, we took a different
attitude toward Wall Street crime. The nastiest of America's super-rich
wheeler-dealers actually went to jail.
In 1938, for instance, prosecutors sent New York Stock Exchange president
Richard Whitney upriver to Sing Sing. Six thousand people gathered at New
York's Grand Central Station to watch armed guards shuffle Whitney onto the
prison-bound train.
We don't, of course, do prison trains anymore. But planes would
do just fine.
OtherWords columnist Sam Pizzigati edits Too
Much, the Institute for
Policy Studies' weekly newsletter on excess and inequality and is the author
of The Rich Don't Always Win, a book that Seven Stories Press will release
in November. OtherWords.org
