Everett, Wash.
Published: Friday, September 26, 2008

CEOs get rich when they get out

Associated Press

 NEW YORK -- With Congress still trying to construct a Wall Street bailout which will likely limit CEO pay, some of the poster boys of the financial crisis have already fled the scene, taking millions of dollars in severance packages with them.

Stanley O'Neal walked away from Merrill Lynch with a package now worth about $66 million. Less than a year later, the storied investment house was forced into a takeover by Bank of America.

Ken Thompson was ousted from Wachovia in June with a "golden parachute" now worth more than $5 million, and Chuck Prince was forced out at Citigroup with a parting gift now valued at $16 million.

They are among the best-known former CEOs in the American banking industry -- an industry that, after they left, was brought to its knees in a crisis that had lawmakers warning about the possibility of outright panic or even another Great Depression.

"These guys took all this risk, and ultimately they won't have to suffer the consequences of their decisions," said Barry Ritholtz, who writes the popular financial blog The Big Picture and is CEO of research firm FusionIQ.

Congress and the Bush administration were working Thursday on a bailout package, perhaps with an ultimate cost of $700 billion, that would have the government buy bad debt off the books of banks. Late in the day, the deal blew up, but it is expected to be reconstructed.

Banks are staggering after the collapse of the housing market triggered a wave of foreclosures, thinned out the bloodlines of credit and left banks holding no-good mortgage-backed securities.

Under the government plan, the long-gone CEOs would not have to give anything back, said Steven Adamske, a spokesman for the House Committee on Financial Services. He said there was no constitutional way to recoup pay retroactively.

Recognizing a public outcry, lawmakers from both parties have been pushing to add curbs on executive pay to the bailout plan -- meaning limits on what companies that take part in the bailout could pay their top officers from now on.

Meanwhile, the former CEOs who accepted fat severance packages from the banks at the heart of the crisis are long gone.

For Citigroup's Prince that means $10.4 million in cash, $1.5 million in perks and stock holdings valued at $22 million that he received on his departure in November 2007. That was after the nation's largest bank announced far bigger-than-expected losses on mortgage-related assets and other risky debt.
© 2009The Daily Herald Co., Everett, WA