Busted Open Thread

Study: CEOs cashed in before Wall Street meltdown

The CEOs of Bear Stearns and Lehman Brothers, the two investment banks that collapsed during last year’s financial meltdown, walked away with hundreds of millions of dollars in compensation even as the company’s shareholders lost everything, says a new report from Harvard Law School.

The top five executives at Bear Stearns made a total of $1.4 billion from bonuses and equity sales between 2000 and 2008, while the top five executives at Lehman Brothers made around $1 billion during that same period — the period during which the companies ran up the bad investments that would see them collapse in 2008, according to “The Wages of Failure” (PDF), a report from Harvard Law School’s Program on Corporate Governance.

FDIC insurance fund closes quarter $8.2 billion in debt

As the number of problem U.S. banks swells to the hundreds, the Federal Deposit Insurance Corporation is increasingly hard-pressed to fill in the gaps where institutions have put depositor’s funds at risk.

Unfortunately, a dire prediction made by government officials in early 2009 has come true: the FDIC’s deposit insurance fund is now broke, according to published reports.

“The deposit insurance fund dropped by $18.6 billion during the third quarter of 2009 to negative $8.2 billion, as the Federal Deposit Insurance Corp. set aside $21.7 billion in provisions for additional bank failures,” The Wall Street Journal reported. “This is the second time in the agency’s history that the balance has fallen into negative territory.”

In March the FDIC took steps to stave off the possibility that its insurance fund would run dry, instituting new fees on banks, forcing them to pay to protect consumers.

The head of the Federal Deposit Insurance Corporation, Sheila Bair, wrote to bank leaders declaring that “without these assessments, the deposit insurance fund could become insolvent this year.”

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Read the FDIC’s full Q3 2009 report [PDF link].