Is a public upset about big bonuses at bailed-out Wall Street firms akin to a lynch mob? The CEO of the insurance giant AIG thinks so. In an interview with the Wall Street Journal, Benmosche talks about the outrage that erupted in March 2009, when AIG—which had just received a $170 billion bailout—announced it would pay up to $450 million to employees in the financial products unit that brought the company to the brink of collapse.
Here's what Benmosche said:
"That was ignorance…of the public at large, the government, and other constituencies. I’ll tell you why. [Critics referred] to bonuses as above and beyond [basic compensation]. In financial markets that's not the case… It is core compensation.
"Now you have these bright young people who had nothing to do with [the bad bets that hurt the company]…They understand the derivatives very well; they understand the complexity…They’re all scared. They probably lived beyond their means…They aren’t going to stay there for nothing.
The uproar over bonuses "was intended to stir public anger, to get everybody out there with their pitchforks and their hangman nooses, and all that–sort of like what we did in the Deep South. And I think it was just as bad and just as wrong.
"We wouldn’t be here today had they not stayed and accepted…dramatically reduced pay…They really contributed an enormous amount [to AIG’s survival] and proved to the world they are good people. It is a shame we put them through that."
Interestingly, the main interview with Benmosche ran in the Journal Friday, but as the Columbia Journalism Review notes, this particular clip only showed up on the website's MoneyBeat blog two days later.
Update, September 25: The White House responded to this story on Tuesday, affirming to Talking Points Memo that Americans will be able to register to vote when applying for insurance through Obamacare. But the administration did not clarify whether it will fully comply with the federal law requiring that navigators, the people hired to help Americans sign up for coverage through the exchanges, be trained to help applicants with voter registration.
Republicans have slammed Obamacare's health care exchanges—where uninsured Americans can apply for subsidized coverage—as "Democrat Party front organizations." That's because the millions of mostly low-income and minority applicants—who tend to vote Democratic—will be asked if they want to register to vote when they sign up for insurance through the exchanges, which open up next week. The administration has been adamant that it will not cede to the GOP on this provision. Until now.
The 1993 National Voter Registration Act (NVRA), known as the Motor Voter law, says that DMVs and other state agencies that provide public assistance have to provide voter registration services. The Obama administration has said that means that both the state-run exchanges, and the federally-run exchanges that are being rolled out in states where Republican governors have refused to set them up, will have to comply with the Motor Voter law. But now it appears that the Department of Health and Human Services (HHS) is wavering on whether it will require the 35 federally-run exchanges to offer voter registration, according to a recent report by the left-leaning policy shop Demos and the voting rights organization Project Vote. Congress also recently launched an inquiry into the matter, Hill staffers told Mother Jones.
During last year's Massachusetts Senate race, the banking giant JPMorgan Chase heaped more than $80,000 on Sen. Elizabeth Warren's opponent Scott Brown. And for good reason. The consumer watch dog agency that she conceived of and helped get running announced Thursday that it has ordered JPMorgan Chase to pay $309 million to more than 2.1 million Americans it scammed, plus a penalty of $20 million.
The Consumer Financial Protection Bureau (CFPB) found that between 2005 and 2012, Chase charged customers monthly fees ranging from $8 to $12 for services they didn't ask for and didn't receive. The bank collected money from customers for credit card products such as "identity theft protection" and "fraud monitoring," even when the consumer hadn't given consent.
The refund the CFPB ordered the bank to issue includes the total fraudulent fees charged, plus interest, and amounts to about $147 a person.
"At the core of our mission is a duty to identify and root out unfair, deceptive, and abusive practices in financial markets that harm consumers," CFPB director Richard Cordray said Thursday.
The bureau is also forcing the bank to send out the refund checks in a simple, convenient way, so that consumers don't have to take any additional action to get their money, and to submit to an independent audit of the refund process.
Thursday was not a good day for for JPMorgan. In a rare admission of fault, the bank was also fined some $920 million for a bad trade out of its London office last year that resulted in a $6.2 billion loss.
Conservatives have been freaking out lately about how Obamacare, the president's signature health care law, could lead to massive identity theft. Now House Republicans have joined in.
The Affordable Care Act provides $67 million to over 100 community and health care groups to hire "navigators" to help sign up uninsured Americans for health coverage through the new health insurance exchanges that go into effect on October 1. A report released by the House Committee on Government Oversight and Reform on Wednesday found that more safeguards are needed to ensure that criminals don't impersonate navigators in order to steal financial details from people trying to sign up for health insurance.
It's already well known that Facebook and other social media networks harvest user data and sell it to companies that use that info to peddle their products to consumers. But some lenders have begun to find a new use for this information, scrutinizing Facebook, Twitter, and LinkedIn data to determine the credit-worthiness of loan applicants. It's an unprecedented practice that consumer advocates say can be unfair or discriminatory—and one that is poised to only become more prevalent in the years ahead.
Among the US-based online lenders that factor in social media to their lending decisions is San Francisco-based LendUp, which checks out the Facebook and Twitter profiles of potential borrowers to see how many friends they have and how often they interact; the company views an active social media life as an indicator of stability. The lender Neo, a Silicon Valley start-up, looks at the quality and quantity of an applicant's LinkedIn contacts for clues to how quickly laid-off borrowers will be rehired. Moven, which is based in New York, also uses information from Twitter, Facebook, and other social networking sites in their loan underwriting process.
Several international lenders have been using similar tactics for a while. Lenddo, for example, which makes loans to folks in developing countries, denies credit to applicants who are Facebook friends with someone who was late repaying a Lenddo loan. Big banks have not yet jumped on board with this controversial credit-vetting method, but consumer advocates and financial industry experts say it's probably only a matter of time.