UPDATE from Feinberg’s press office: The announcement will be at 10 am and will conclude his review of executive pay in late 2008 and early 2009. The review covered payments to “Top 25” executives at the 419 firms that received taxpayer assistance.
So there might be a list of names revealed after all.
Feinberg told Charlie Gasparino earlier this week that his big announcement on which banks he will target to demand bonus “clawbacks” is coming on Friday.
Top executives and employees who received large payouts from financial firms during the 2008 end-of-year bonus are freaking out right now that their banks’ name, or perhaps even their own name, will be on the list and their bonus might be targeted in a future “clawback” provision.
It’s unclear whether Feinberg’s annoucement will target individuals straight away, or just the banks who paid them, but this is known: He will announce a number of banks, likely including JPMorgan, Goldman Sachs, Citi, and Morgan Stanley, that received TARP payments during the financial crisis and detail how they should handle large payouts made to executives during a crisis.
The Wall Street Journal says Feinberg doesn’t have the power to demand any money be repaid. He can try, but he would have to fight the contract between the bank and that employee.
And it was believed that Feinberg decided last year that the court did not have the right to demand a bonus back from top trader Andy Hall, so it is possible that Feinberg’s renewed interest in the bonuses paid out during the financial crisis is an attempt to convince banks to adopt a provision that would, in the future, limit their ability to pay out large sums during a crisis and allow clawbacks if earnings are restated.
But if firms agreed to adopt such a provision, it would essentially allow a company to void compensation contracts with their employees.
On the flip side, if they don’t agree to adopt the provision, it will be possible for huge payouts, like those given to AIG execs last year, to be paid by a firm that only exists thanks to taxpayer funds.
The fear about tomorrow’s announcement is mostly that Feinberg could announce that he wants some banks to clawback bonuses they gave out during the financial crisis. An announcement that he wants banks to adopt a new provision would be the next worst option, because it would mean that banks might write compensation contracts that they are able break in case of emergency.
It will all kick off tomorrow with Feinberg’s announcement.