By Tyler Dean
Big bank CEOs got a nice pay raise last year, a 12% increase bringing the average bank CEOs pay to $12.8 million, according to research by Equilar, an executive compensation data firm.
The pay raises come while the economy is still in bad shape and rumors of massive bank flight are giving many market analysts nightmares. Bank shareholders are beginning to realize that something is wrong with the current CEO pay structure. In April, Citigroup’s shareholders voted against Citigroup’s executive compensation plan in an advisory vote.
Equilar says Brian Moynihan, chief executive of Bank of America, received the largest pay raise out of all examined CEOs. His pay package jumped to $7.5 million last year from $1.2 million the year before, or 513 percent. Really, Citigroup CEO Vikram Pandit’s pay rose the most last year, to $14.9 million from $1 in 2010, but Equilar classified that bump as “N/A.”
JPMorgan Chase CEO Jamie Dimon got an 11 percent pay raise making him the highest-paid bank CEO.The only CEO who saw his pay decrease was Morgan Stanley’s James Gorman.
This news comes at a time where unemployment remains high and job creation has slowed. The news is hard to swallow, especially for those who are struggling just to pay their bills.
When the Wall Street bail out occurred, many bank CEOs gave themselves raises, took lavish vacation, and simply misused the money that they were given. Americans are beginning to join credit unions as opposed to banks. Some former bank customers who have switched said that they blamed banks for excessive fees.
“My old bank charged me for using another ATM, while the owner of the ATM charged me as well.” said Amy Goode, a former bank customer. “The credit unions are pretty straight up with what they offer. “
Michael Adams, a consumer advocate told us, “Banks have really begun to stick it to their customers. Fees for overdrafts, fees for using non-bank ATMs, bad customer service, and general trust issues are causing people to look for alternatives.”
Adams points to bank take overs as another reason for consumers leaving banks for credit unions. “People get used to a certain bank, they know the policies and any fees, then their bank gets bought out by another bank and slowly but surely, policy changes happen. We have seen Wells Fargo snatch up many bank chains and change old policies to reflect their own.”
Should Banks Be Allowed To Fail?
This question comes up time and time again. Some sell ban failure as a sign of economic disaster. Those who believe that bank failure equals economic disaster are economist directly employed or paid off by the banks themselves.
Michael Adams had this to say, “If a bank fails, it shouldn’t hurt the economy. If businesses are still hiring, shoppers are still spending, then the failure of a few banks should be no concern. If you think about it, banks are FDIC insured, meaning that if a bank folds, consumers still keep their money.”
Should a citizen open a small business and it fails, it isn’t viewed as a sign of a failing economy. Small businesses don’t receive big bailouts from the government. During the height of the recession, many small family businesses suffered losses and were even forced to close.
Adams points to this fact to support his belief that banks shouldn’t receive government help. “In this country we have corporations and banks that work out tax loopholes to cut down on what they pay to the government. They don’t always pay their share. Small businesses are often lucky if they can get any tax breaks, let alone sizable ones. Even though small businesses account for the majority of employment in this country, the government has never sought to bail out small businesses. They don’t have the lobbyists or money to pay off politicians the way that corporations and banks can.”
Last month bank flight was a top search trend on Google prompting some analysts to expect the worst. The question remains, do Americans still trust banks?
- It Was An Awesome Year For Big Bank Executives’ Compensation (businessinsider.com)
- World’s top bankers handed 12% pay rise… despite profits and share prices plummeting (dailymail.co.uk)