Topline: The Federal Deposit Insurance coverage Company was pressured to spend $31.6 billion to guard clients at three failed banks in early 2023. Whereas taxpayers footed the invoice, the CEOs of the three banks made out properly, every accumulating tens of millions in compensation proper earlier than their banks folded, in response to a Feb. 20 report from the Authorities Accountability Workplace.
Key info: First Republic Financial institution gave CEO James Herbert II $17.8 million in compensation in 2021, in response to the GAO. Silicon Valley Financial institution awarded CEO Greg Becker $9.9 million in 2022 and Signature Financial institution paid $8.7 million to Joseph DePaolo the identical 12 months.
All three CEOs had base salaries beneath $1.2 million however multiplied their earnings with performance-based incentives, principally paid out as inventory within the financial institution.
All three bought off massive parts of their inventory within the two years main as much as their banks’ failures, the GAO discovered. Between 2021 and 2023, Herbert II bought $52.9 million of his inventory, DePaolo bought $39.8 million and Becker bought $30.7 million.
Herbert II and Becker had been nonetheless promoting inventory within the first quarter of 2023, simply weeks earlier than their banks closed down. They collected $5.5 million and $3.6 million, respectively, the GAO stated.
Every financial institution had not less than 4 different executives incomes greater than $1 million per 12 months, the GAO reported.
RELATED: There It Is: Democrat Al Inexperienced To Introduce Articles of Impeachment In opposition to Trump
Background: The financial institution failures had been the three largest in U.S. historical past other than Washington Mutual’s closure in 2008.
The FDIC needed to spend $31.6 billion of taxpayer cash to reimburse depositors for his or her losses: $16.1 billion for Silicon Valley, $13 billion for First Republic and $2.5 billion for Signature.
The FDIC additionally reimbursed a number of international companies. Former vp Mike Pence wrote in an op-ed for the Every day Mail that “Americans will also be paying to guarantee the deposits of many Chinese companies that were Silicon Valley customers. We have to stop the insanity of bailing out failing businesses.”
Important quote: “You were paying out bonuses until literally hours before regulators seized your assets,” Sen. Sherrod Brown advised Becker throughout a 2023 Congressional listening to. “Workers face consequences, executives ride off into the sunset. Only in corporate boardrooms can you run your business into the ground, take the whole economy along with you and come out ahead.”
Abstract: One thing is amiss when a enterprise closure hurts the federal government’s funds greater than it does the executives operating the enterprise.
The #WasteOfTheDay is dropped at you by the forensic auditors at OpenTheBooks.com
Syndicated with permission from RealClearWire.
