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Friday, March 29, 2024

Ken Feinberg To Clawback 2008 Bonus Money On Friday

Courtesy of Tyler Durden

Fox Biz reports that Ken Feinberg, as one of his last ineffectual actions during his soon to be forgotten tenure, will announce on Friday the clawback of various bonuses paid during the 2008 year of ubiquitous bail outs. Since every single bank received some form of assistance in 2008, and many still benefit from the ridiculously low rates on the FDIC-backed TLGP debt (which only has 1.5 years before it matures), it is unclear which banks will be the target of this last attempt to recover some taxpayer money out of the TBTF. Also, since these same banks run the country via their Federal Reserve lobby, it is unclear if and to what extent the Goldmans of the world will agree to this action. As Gasparino reports: “In an interview, Feinberg refused to say how much money he’s going to ask for or which banks will be targeted. “I’m aiming for Friday to make an announcement,” he said in an interview. “The banks will be notified shortly.” Feinberg declined to say whether the five remaining banks — Citigroup, JPMorgan, Goldman Sachs, Morgan Stanley and Bank of America — would be repaying any of the claw-back money; his mandate covers 418 banks, but people on Wall Street suspect the main focus of his mandate will be the large financial institutions.”

More from Fox Business:

In 2008, for instance, Goldman Sachs received $10 billion directly from the federal government, as well as billions more when the feds bailed out AIG (AIG: 35.465, 0.115, 0.33%), which insured some of Goldman’s holdings of toxic debt, yet it paid $4.8 billion in bonuses that year. Even with the various bailouts, Goldman made just $2.3 billion in 2008. But that’s better than Citigroup and Merrill Lynch, which was purchased by Bank of America during the dark days of the financial crisis. Combined, these banks lost $54 billion in 2008, but paid out $9 billion in bonuses.

Meanwhile, Morgan Stanley earned $1.7 billion in 2008 with the bailout money, and paid out $4.475 billion; JPMorgan earned $5.6 billion and paid bonuses $8.69 billion that year.

It’s still unclear how banks might repay this money; some people on Wall Street suspect they would be asked to return funds from current profits, rather than ask individuals who received a 2008 bonus to mail a check back to the Treasury Department.

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