New Report Exposes The Scandal of Excessive Executive Bonuses
Thanks to the growing publicity of the abusive practices of big banks, people around the country are fighting back by moving their money to more responsible institutions and calling for greater protections against
predatory banking and foreclosure practices. Detailing the disparities between the average American and big bank executives, The New Bottom Line, in partnership with The Public Accountability Initiative, released a report in December noting the outrageous bonuses and salaries at seven of the largest banks in America.
The report shows these executives earned a collective $156 billion in compensation in 2011, a projected increase of 3.7% over the previous year. To break that down, Brian Moynihan of Bank of America received $5,000 an hour, which could be considered “small” when compared to Goldman Sachs CEO Lloyd Blankfein, who earned an astonishing $9,300 an hour.
While banks made massive layoffs this year, CEOs were rewarded with even larger paychecks and held unaccountable for behavior that destroyed the livelihoods of many Americans. Personal incentives are now lined up strictly with illegal profit-at-all-cost tactics like breaking loan modification agreements, robo-signing foreclosures, and hiding fees. This is the clearest symptom of the brokenness of an economic system that idolizes profiteering as a sign of achievement deserving extravagant reward. Any unsuspecting consumers who end up as the collateral damage in this process are secondary concerns, if at all.
While big bank CEO’s are earning thousands of dollars an hour, the federal minimum wage remains woefully inadequate at $7.25 an hour. Bank of America employees are not immune from these income disparities, with the average teller at the company requiring “11 weeks of work, to make what Bank of America CEO Brian Moynihan made in one hour last year ($5,000).” The small dot seen at the center of this graphic below represents the hourly salary of the average American worker, in comparison to big bank CEO’s average hourly wage of approximately $8,000.
While these outrageous inequalities and corrupt business practices are an unfortunate reality, the Dodd Frank Wall Street regulation passed last year is taking positive, if limited, steps toward addressing them. Consumers received a boost this week with the appointment of Richard Cordray as director of the Consumer Financial Protection Bureau, where he will implement consumer protections passed under the legislation. Thankfully, the act gives the bureau the authority to establish new rules for the structure of employee compensation. It remains to be seen though whether this framework can curtail the stunning abuses of power and inequality that have arisen from the financial sector.
But with continued pressure from alert consumers and greater oversight of the banking and financial industry, Americans are on the road to reclaiming the power that has been held by big banks for far too long.