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Bank Auditors Also Got Large Bonuses

From a not quite outraged Associated Press:

Gov’t bank auditors got big bonuses

By Matt Apuzzo, Associated Press Writer

March 18, 200

WASHINGTON – Banks weren’t the only ones giving big bonuses in the boom years before the worst financial crisis in generations. The government also was handing out millions of dollars to bank regulators, rewarding "superior" work even as an avalanche of risky mortgages helped create the meltdown.

The payments, detailed in payroll data released to The Associated Press under the Freedom of Information Act, are the latest evidence of the government’s false sense of security during the go-go days of the financial boom. Just as bank executives got bonuses despite taking on dangerous amounts of risk, regulators got taxpayer-funded bonuses despite missing or ignoring signs that the system was on the verge of a meltdown.

The bonuses were part of a reward program little known outside the government. Some government regulators got tens of thousands of dollars in perks, boosting their salaries by almost 25 percent. Often, though, rewards amounted to just a few hundred dollars for employees who came up with good ideas.

During the 2003-06 boom, the three agencies that supervise most U.S. banks — the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Office of the Comptroller of the Currency — gave out at least $19 million in bonuses, records show.

Nearly all that money was spent recognizing "superior" performance. The largest share, more than $8.4 million, went to financial examiners, those employees and managers who scrutinize internal bank documents and sound the first alarms. Analysts, auditors, economists and criminal investigators also got awards.

After the meltdown, the government’s internal investigators surveyed the wreckage of nearly 200 failed banks and repeatedly found that those regulators had not done enough…

Because most bank inspection records are not public and the government blacked out many of the employee names before releasing the bonus data, it’s impossible to determine how many auditors got bonuses despite working on major banks that failed.

Regulators says it’s unfair to use those missteps, seen with the benefit of hindsight, to suggest any of the bonuses was improper

In government, as on Wall Street, bonuses are part of the culture. Federal employees can get extra pay for innovative ideas, recruiting new talent or performing exceptional work. Candidates being considered for hard-to-fill jobs may be offered student loan reimbursement or cash bonuses to get them in the door and keep them from leaving.

The bonus data released to the AP does not say specifically why each person received a bonus. For instance, one person in the OCC’s financial examining division got a $41,000 recruitment bonus on top of a $179,000 salary in 2005. In 2006, the last boom year for banks buying risky mortgages, the FDIC gave out more than 2,000 bonuses to financial examiners.

In 2008, the year the market collapsed, OTS gave 96 financial examiners bonuses of up to $3,000 for exceptional work.

At the three regulatory agencies, the value of the bonuses stayed roughly constant from before the banking boom, through the good times and into the collapse. While the total pales in comparison with the billions spent on Wall Street perks, the justification was similar…

It is a little odd that more than two years into this crisis our watchdog media are just getting around to looking at the regulators.

Also, to be fair, the Bush administration and government regulators like Armando Falcon Jr., (the director of the Office of Federal Housing Enterprise Oversight) did call many times for financial reform.

But they were ignored – or worse.

This article was posted by Steve on Thursday, March 18th, 2010. Comments are currently closed.

3 Responses to “Bank Auditors Also Got Large Bonuses”

  1. GetBackJack says:

    1987 – attended a party of fellow workers. Chatted up an attractive young lady, the usual questions. When I got to “what do you do?” she fished in her hand bag and came up with a business card, Federal Bank Inspector. (exact title escapes me 23 years later)

    “Wow.” The wow was because she looked all of 22, and the other things she’d said in our brief exchanges indicated a sorority party girl mindset fresh out of a Spring Break binge of bad decisions, undeveloped ideas and cheap shots at political figures of the day.
    “Yeah, it’s cool job.”
    “Cool, huh?”
    “Oh yeah. I get to boss old men around all day who think they know everything. Never had this much fun.”
    “Uh-huh. I plan to be a District Supervisor in the next couple of years and after that I think I’ll be in Washington.”
    “So, these old guys who built and run these banks don’t know what they’re doing?”
    “Oh, no. Well, doesn’t really matter does it? They have to do what I say.”

    Four years later I was neck deep in Resolution Trust issues, DIDMCA, moving failed assets from collapsing S&Ls and ran into her by the most peculiar circumstance since we’d met in Denver and this was now Atlanta.

    Still a fricking bubble headed bleached blonde bombshell with rice pudding between her ears. A terrifying look into at least one small part of the ‘bank examiner’ trade.

    Nothing is as it appears to be.


  2. Liberals Demise says:

    Wonder what the first time unemployed are having for dinner?
    Me ……… poor mans’ steak with mustard and onions.

    Your tax dollars hard at work!!

  3. MinnesotaRush says:

    Who knows .. this “fricking bubble headed bleached blonde bombshell with rice pudding between her ears” could well be President some day and be an improvement over o-blah-blah.

    Just sayin’.

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