House Dems Slam Big Bank CEOs Over Pay Disparity

Sarah Anderson Director, Global Economy Project, Institute for Policy Studies

For the first time in a decade, CEOs of America’s mega-banks were summoned to Capitol Hill on April 10 to face scrutiny from lawmakers. House Financial Services Committee Chair Maxine Waters (D-Calif.) explained that her goal was to find out what — if anything — the seven Wall Street leaders had learned since the 2008 financial crisis.

In a fearless grilling of the Wall Street heavyweight, first-term California Democrat Katie Porter, a former consumer protection attorney, skewered Dimon for pocketing such a massive sum while paying his entry-level employees poverty wages. Using the example of one of her constituents, a single mom earning $16.50 an hour as a JPMorgan Chase teller, she pressed Dimon for solutions to the woman’s household budget shortfall.

“I don’t know, I’d have to think about that,” Dimon admitted.

“What I’d like you to do,” Porter scolded, “is provide a way for families to make ends meet, so that little kids who are six years old living in a one-bedroom apartment with their mother aren’t going hungry at night because they’re $567 short.”

Citigroup CEO Michael Corbat stands out among the group for having the largest gap between his pay and that of the typical employee at the bank.  Last year, he pocketed $24.2 million — 486 times more than median pay at Citi of $49,766. Corbat squirmed under intense questioning from New York Democrat Nydia Velázquez about this pay disparity. When he attempted to shift responsibility onto his board, Velázquez was having none of it. “Just unbelievable,” she said, shaking her head in disgust.

One Wall Street titan was happy about the hearing — or at least happy not to be among those brought before the klieglights. Lloyd Blankfein, who became a billionaire as the CEO of Goldman Sachs before retiring last year, trolled his former counterparts before the testimony began, sarcastically commenting, “Boy, I really miss my old job!!!”

In a preemptive move, Bank of America announced before the hearing that it would raise their U.S. bank employees’ minimum wage to $20 an hour in the next two years, up from the current $15. With the tightening labor market, other banks are likely to boost starting pay as well.

But on the CEO end of the pay gaps, much more needs to be done to rein in the excess. Policymakers should push regulators to finally implement the banker pay restrictions in the 2010 Dodd-Frank financial reform legislation. For nine years now, powerful Wall Street lobbyists have succeeded in blocking Section 956 of that law, which prohibits financial industry pay packages that encourage “inappropriate risks.” Regulators were supposed to implement this new rule within nine months of the law’s passage.

Lawmakers should also support growing efforts to use tax policy to encourage banks and big corporations to narrow their pay gaps. One model already in force in Portland, Oregon slaps a 10 percent surtax on companies that pay their CEO more than 100 times median worker pay. The gaps at all the mega-banks exceed that level. The tax penalty rises to 25 percent for firms with pay ratios greater than 250 to 1.

Such proposals have been introduced in seven states and the U.S. Congress. As a new Roosevelt Institute report puts it, these taxes send “a clear message that local governments — and the federal government — can use this pay ratio as a powerful tool in highlighting bad governance decisions that harm workers and our economy.”

Posted In: Allied Approaches

Union Matters

He Gets the Bucks, We Get All the Deadly Bangs

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

National Rifle Association chief Wayne LaPierre has had better weeks. First came the horrific early August slaughters in California, Texas, and Ohio that left dozens dead, murders that elevated public pressure on the NRA’s hardline against even the mildest of moves against gun violence. Then came revelations that LaPierre — whose labors on behalf of the nonprofit NRA have made him a millionaire many times over — last year planned to have his gun lobby group bankroll a 10,000-square-foot luxury manse near Dallas for his personal use. In response, LaPierre had his flacks charge that the NRA’s former ad agency had done the scheming to buy the mansion. The ad agency called that assertion “patently false” and related that LaPierre had sought the agency’s involvement in the scheme, a request the agency rejected. The mansion scandal, notes the Washington Post, comes as the NRA is already “contending with the fallout from allegations of lavish spending by top executives.”

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Corruption Coordinates

Corruption Coordinates