Former US bank bosses quizzed over pay
The former chiefs of three of Wall Street's biggest finance companies are to have their huge pay packets scrutinised by the House Oversight and Government Reform Committee.
Stanley O'Neal, once head of Merrill Lynch, and Charles Prince, ex-boss of Citigroup, both received massive pay offs when they were forced out following last year's big losses linked to the sub-prime mortgage crisis.
The committee, chaired by Democrat Henry Waxman, will also question Countrywide Financial's top man, Angelo Mozilo, who received compensation of $250m between 1998 and 2007, and is said to have made another $406m from the sale of Countrywide stock.
He is also reported to have resisted advice to moderate pay as the company, the largest mortgage lender in the US, reported a $1.2bn loss in the third quarter of 2007 and a $422m loss the quarter after, and watched its share price plunge 80% by the end of the year.
Meanwhile, O'Neal, who left Merrill last October, had the blow cushioned by $161.5m in shares, options and retirement benefits, as the investment bank nursed an $18bn loss due to its sub-prime exposure.
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Prince, who resigned from America's largest bank in November, did less well, but still picked up a bonus of $10.4m last year and $28m in stock and options, plus perks, including the use of an office, an administrative assistant, a car and driver for five years, worth an extra $1.5m a year.
"There is a major disconnect between the pain being suffered by average investors and the huge bonuses being enjoyed by the investment bankers," said director of investor protection at the Consumer Federation of America, Barbara Roper.
But Republican committee member Tom Davis looks likely to defend the stellar pay awards. "Markets correct themselves, and we need to let that process proceed. Directors and shareholders already have begun to work to correct the problems," he said.
"A sanctimonious search for scapegoats may feel good, but it benefits no one,'' added Davis of Virginia.
