News / USA

Bailed-Out US Banks Slammed for Lavish Payments

The U.S. official charged with reviewing pay practices at the country's large financial institutions has criticized 17 banks for over-paying their executives during the financial crisis.

Kenneth Feinberg said Friday the 17 banks made a combined $1.6 billion in legal but "ill-advised" payments to their top executives while getting emergency government loans.

The Obama administration appointed Feinberg to examine the pay of top executives at more than 400 banks in late 2008 and early 2009.

Feinberg said most of the banks do not understand the public outrage that resulted from the excessive payments, but said he does not have the authority to force the banks to return any of the money.

Instead, Feinberg recommended the banks adopt new rules to limit payments to top officials during future crises.

He said 11 of the 17 banks have repaid the government for their emergency loans.  

U.S. President Barack Obama said Friday the "lavish bonuses" to top executives at the 17 banks shows the need for the financial reforms he signed into law earlier this week.  He said the new law will help expose the types of "shadowy deals" that helped spark the financial crisis.

Mr. Obama also said the reforms will eliminate the need for any future taxpayer bailouts of financial firms.

Meanwhile, the U.S. Treasury Department said it is trying to recover some more of the $700 billion the government spent to bail out the country's financial industry.

Officials said Friday it is selling billions of government-owned shares in Citigroup, one of the nation's largest banks.

The U.S. government gave Citigroup $45 billion in emergency aid to keep the bank from failing.  Citigroup repaid $20 billion in cash and gave the U.S. government a stake in the company to cover the rest of the loan.

The government converted its stake in Citigroup into stock last year.  It has already sold about 2 billion shares for about $10.5 billion.

Some information for this report was provided by AP, AFP and Reuters.

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