Large financial institutions that took federal bailout money continue to struggle with the burdens of government oversight, with one changing its management team this week and another asking permission to pay out bonuses it already has a right to distribute.
Citigroup Inc. announced that Edward J. Kelly, chief financial officer, had been shifted to an advisory position, vice chairman of the company's board of directors.
John C. Gerspach, chief accounting officer, was elevated to Kelly's position.
Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corp., had raised concerns about Citigroup's operations and management, the New York Times reported.
Citigroup received $50 billion as part of the Troubled Asset Relief Program, and unlike some other bailed-out companies has not made any movement toward repayment. Those that have exited the TARP program have cited as reasons an uncertain regulatory environment and the fear of government intervention in business decision-making.
The FDIC has become increasingly worried about Citigroup's progress in solving its financial issues and turning around its operations, Times reported. In June, Mr. Kelly made what were perceived as deprecatory remarks about the FDIC - he called it a "tertiary" regulator not on par with the Federal Reserve and the Comptroller of the Currency - while at the same time Treasury officials worried that the company was lagging in its efforts to sell off troubled assets.
Treasury also worried that Citigroup's top leadership lacked sufficient commercial banking experience, and in late June it placed Kelly's role at the top of a list of matters it wanted the company to address, according to the Times.
In related news, American International Group Inc. has asked Kenneth R. Feinberg, the Treasury's recently appointed compensation czar, for permission to pay out millions of dollars in bonuses. A major sticking point, however, is that the firm does not need Feinberg's assent and is asking for it in order to shield itself from public criticism.
AIG, which was approved for $180 billion in bailout funding, came under withering criticism earlier this year when it attempted to pay out $165 million in bonuses to employees of its much maligned derivatives trading desk. The massive outpouring of rage at the decision was mainly responsible for the creation of Feinberg's role as overseer of compensation matters for bailed-out companies.
New rules put in place to limit compensation, however, do not apply to the $2.4 million in bonuses AIG now wants to pay because they were contracted for before the rules were enacted.
Citigroup Inc. announced that Edward J. Kelly, chief financial officer, had been shifted to an advisory position, vice chairman of the company's board of directors.
John C. Gerspach, chief accounting officer, was elevated to Kelly's position.
Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corp., had raised concerns about Citigroup's operations and management, the New York Times reported.
Citigroup received $50 billion as part of the Troubled Asset Relief Program, and unlike some other bailed-out companies has not made any movement toward repayment. Those that have exited the TARP program have cited as reasons an uncertain regulatory environment and the fear of government intervention in business decision-making.
The FDIC has become increasingly worried about Citigroup's progress in solving its financial issues and turning around its operations, Times reported. In June, Mr. Kelly made what were perceived as deprecatory remarks about the FDIC - he called it a "tertiary" regulator not on par with the Federal Reserve and the Comptroller of the Currency - while at the same time Treasury officials worried that the company was lagging in its efforts to sell off troubled assets.
Treasury also worried that Citigroup's top leadership lacked sufficient commercial banking experience, and in late June it placed Kelly's role at the top of a list of matters it wanted the company to address, according to the Times.
In related news, American International Group Inc. has asked Kenneth R. Feinberg, the Treasury's recently appointed compensation czar, for permission to pay out millions of dollars in bonuses. A major sticking point, however, is that the firm does not need Feinberg's assent and is asking for it in order to shield itself from public criticism.
AIG, which was approved for $180 billion in bailout funding, came under withering criticism earlier this year when it attempted to pay out $165 million in bonuses to employees of its much maligned derivatives trading desk. The massive outpouring of rage at the decision was mainly responsible for the creation of Feinberg's role as overseer of compensation matters for bailed-out companies.
New rules put in place to limit compensation, however, do not apply to the $2.4 million in bonuses AIG now wants to pay because they were contracted for before the rules were enacted.
published July 10, 2009, 0 Comments
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