WASHINGTON For all his tough talk about excessive pay for bankers, the Obama administrations pay czar let the executives go without a fight.
Kenneth Feinberg announced Friday he would not try to recoup $1.6 billion in compensation given to top executives at bailed-out banks because he thought shaming them was punishment enough.
His decision to go easy on 17 banks that made ill-advised payments to their executives is likely to fuel concerns about how he will oversee the $20 billion oil spill compensation fund created by BP.
Im not suggesting we should blink or turn the other cheek, Feinberg said later in an interview with The Associated Press. These 17 companies were singled out for obviously bad behavior. The question is: At what point are you piling on and going beyond what is warranted?
He could not force the banks to repay the money, but the law instructed him to negotiate with banks to return money if he determined that the pay packages were contrary to the public interest language that he opted not to use.
Still, his leniency is a far cry from the bravado he displayed in the months leading up to his final act as pay czar. In February, he spoke with confidence about his ability to get companies that received taxpayer help to accept less.
In an interview with The Hill newspaper, Feinberg said he had been fairly successful in convincing the companies that it is in their best interests to seek an accommodation on compensation.
Among the companies Feinberg did not pursue were two whose bailouts are expected to cost taxpayers more than $38 billion: American International Group Inc. and CIT Group Inc. He also ignored excessive pay at Wall Street powerhouses such as Goldman Sachs Group Inc. and JPMorgan Chase & Co., which reaped massive profits from government efforts to stabilize the financial system. They had no trouble repaying their bailouts.
He said a fight with those banks could have exposed them to lawsuits from shareholders trying to recapture the executives money, and he did not think that would be fair.
Sen. Bernie Sanders, a Vermont independent, said he was disappointed that Feinberg decided there was no way to force the banks to return the bonus payments.
These peoples jobs were saved by the taxpayers of this country, and their response was to give themselves these huge bonuses, Sanders said. Many Americans lost their jobs because of this Wall Street greed. It is one of the reasons the American people are as angry as they are.
Many Gulf Coast fishermen are angry, too, at the way BP and the government have handled the legal claims of those whose earnings have been hurt by the oil spill.
Paul Nelson, a fisherman in Coden, Ala., who leads the South Bay Communities Alliance on the Alabama coast, said the fishermen he represents feel they have no voice in the claims process.
Where is the citizen input? he said.
Its not the first time Feinberg has talked tough but taken a light touch with bankers.
He clashed publicly with AIG CEO Robert Benmosche while quietly approving a pay package worth more than $10 million.
He announced in October 2009 that he had cut cash pay by 90 percent at the handful of companies that got the biggest bailouts. Yet the changes were not retroactive; they only applied to the final six weeks of that year.
That track record concerns some Gulf state officials.
Alabama Attorney General Troy King announced Thursday he will file suit against BP to recover tax revenues lost because of the oil spill and to recoup cleanup costs. At the news conference, he said Feinberg seems to be working more for BP than for the people harmed.
Feinberg strongly defended his independence from BP, saying his actions speak for themselves.