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

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work